Beyond Boone, Llc – Appalachian State University Project) Series 2019

New Issue – Book-Entry-Only Rating: Moody’s “A2” (Insured) Moody’s “Baa3” (Underlying) S&P: “AA” (Insured) S&P: “BBB-” (Underlying) (See “RATINGS” herein) In the opinion of McGuireWoods LLP, Bond Counsel, based on existing law and assuming compliance with the provisions of the Internal Revenue Code of 1986, as amended, as described herein, interest on the 2019A Bonds is excludable from gross income of the owners of the 2019A Bonds for federal income tax purposes and is not a specific item of tax preference for purposes of the federal alternative minimum tax. Interest on the Series 2019B Bonds will be included in gross income for federal income tax purposes. See “TAX MATTERS” herein. $61,685,000 PUBLIC FINANCE AUTHORITY STUDENT HOUSING REVENUE BONDS (BEYOND BOONE, LLC – APPALACHIAN STATE UNIVERSITY PROJECT) SERIES 2019

consisting of: $60,760,000 $925,000 Series 2019A Taxable Series 2019B The Public Finance Authority (the “Authority”) is issuing (i) $60,760,000 aggregate principal amount of its Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project), Series 2019A (the “Series 2019A Bonds”) and (ii) $925,000 aggregate principal amount of its Taxable Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project), Series 2019B (the “Series 2019B Bonds” and collectively with the Series 2019A Bonds, the “Series 2019 Bonds”). The Series 2019 Bonds are being issued pursuant to a Trust Indenture dated as of February 1, 2019 (the “Indenture”) between the Authority and Wilmington Trust, National Association, as trustee (the “Trustee”).

The Authority will lend the proceeds of the Series 2019 Bonds to Beyond Boone, LLC (the “Borrower”) a Delaware limited liability company, pursuant to a Loan Agreement dated as of February 1, 2019 (the “Loan Agreement”) between the Authority and the Borrower for the purpose of providing funds (i) to finance the cost of acquiring, constructing, furnishing, equipping an approximately 590-bed student housing facility (“Building 100”), a structured parking garage with approximately 477 spaces (the “Parking Facility”), associated site development and off-site infrastructure improvements including, but not limited to, grading, street and sidewalk improvements and utility infrastructure (collectively, the “Offsite Improvements,” and together with Building 100 and the Parking Facility, the “Series 2019 Project”) to be located on that portion of the campus of Appalachian State University (the “University”) that has been designated as a “Millennial Campus” pursuant to Article 21B of Chapter 116 of the General Statutes of North Carolina, as amended (the “Millennial Campus”) in the Town of Boone, North Carolina (the “Project Jurisdiction”), (ii) to fund capitalized interest on the Series 2019 Bonds during construction of the Series 2019 Project and for a period of six months thereafter, (iii) to fund the Debt Service Reserve Fund for the Series 2019 Bonds, (iv) to pay the premium for the Series 2019 Bond Insurance Policy and the premium for the Series 2019A Reserve Policy (each as hereinafter defined), and (v) to pay the costs of issuing the 2019 Bonds. The Series 2019 Project will be owned and operated by the Borrower whose sole member is Beyond Owners Group, Inc. (“Beyond Owners Group”), a Pennsylvania non-profit corporation and an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Series 2019 Bonds will be payable solely, except to the extent paid out of moneys attributable to proceeds of the Series 2019 Bonds and from temporary investments thereof, from a pledge by the Authority of moneys derived from the Loan Agreement between the Authority and the Borrower, and from property pledged by the Borrower under the Leasehold Deed of Trust, the Security Agreement, and the Assignment of Contracts, all as defined and described herein. See“SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2019 BONDS” herein.

The Series 2019 Bonds will be issuable as fully registered bonds without coupons in the denominations of $5,000 and any multiple thereof. The Series 2019 Bonds will bear interest from the date of issuance and delivery thereof, payable semiannually on each January 1 and July 1, commencing July 1, 2019 (each, an “Interest Payment Date”). Principal and interest payments on the Series 2019 Bonds will be made by Wilmington Trust, National Association, as Trustee, to the registered owners of the Series 2019 Bonds as of the close of business on the fifteenth (15th) day (whether or not a business day) of the month immediately preceding each Interest Payment Date. The Series 2019 Bonds will be subject to prior mandatory, optional, and extraordinary redemption as described herein. See “THE SERIES 2019 BONDS” herein. The Series 2019 Bonds will be issued as fully registered bonds and when issued will be initially registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Series 2019 Bonds and purchasers of the Series 2019 Bonds will not receive certificates evidencing their ownership interests therein. So long as Cede & Co. is the registered owner of the Series 2019 Bonds as nominee of DTC, references herein to the Owners of the Series 2019 Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the Series 2019 Bonds. So long as Cede & Co. is the registered owner of the Series 2019 Bonds, the payments of principal and redemption price of, and premium, if any, and interest (collectively, the “Debt Service Payments”) on the Series 2019 Bonds will be made to Cede & Co., as nominee for DTC, which will in turn remit such Debt Service Payments to the Direct Participants and Indirect Participants for subsequent disbursement to the beneficial owners. See“BOOK ENTRY SYSTEM” in Appendix “E.” See “CERTAIN BONDHOLDERS’ RISKS” herein for a discussion of certain risk factors that should be considered in connection with an investment in the Series 2019 Bonds. Each prospective purchaser should consider the risks involved to determine the suitability of investing in the Series 2019 Bonds.

The scheduled payment of principal of and interest on the Series 2019 Bonds when due will be guaranteed under a bond insurance policy to be issued concurrently with the delivery of the Series 2019 Bonds by Assured Guaranty Municipal Corp.

THE SERIES 2019 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF THE AUTHORITY, ANY MEMBER, ANY SPONSOR, ANY AUTHORITY INDEMNIFIED PERSON (EACH AS DEFINED IN THE INDENTURE), THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2019 BONDS IS OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2019 BONDS ARE NOT A DEBT OF THE STATE OF WISCONSIN OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2019 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2019 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2019 BONDS, NOR THE FAITH AND CREDIT OF THE AUTHORITY, ANY SPONSOR OR ANY AUTHORITY INDEMNIFIED PERSON, WILL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2019 BONDS OR ANY COSTS INCIDENTAL THERETO. THE AUTHORITY HAS NO TAXING POWER.

The Series 2019 Bonds are offered when, as, and if issued by the Authority and received by the Underwriter and are subject to prior sale and the approval of legality by McGuireWoods LLP, Raleigh, North Carolina, Bond Counsel, and to certain other conditions. Certain legal matters will be passed upon for the Authority by von Briesen & Roper, s.c., Milwaukee, Wisconsin; for the Borrower and Beyond Owners Group by MacElree Harvey, Ltd, West Chester, Pennsylvania and Johnston, Allison & Hord, PA, Charlotte, North Carolina; for the University by Bryant Miller Olive P.A., Orlando, Florida; and for the Underwriter by Parker Poe Adams & Bernstein LLP, Charlotte, North Carolina. First Tryon Advisors, Charlotte, North Carolina, is serving as financial advisor to the University in connection with the execution and delivery of the Series 2019 Bonds. Delivery of the Series 2019 Bonds to DTC in New York, New York is expected on or February 14, 2019.

Dated: February 7, 2019

$61,685,000 PUBLIC FINANCE AUTHORITY STUDENT HOUSING REVENUE BONDS (BEYOND BOONE, LLC – APPALACHIAN STATE UNIVERSITY PROJECT) SERIES 2019

CONSISTING OF: $60,760,000 $925,000 SERIES 2019A TAXABLE SERIES 2019B

Dated: Date of Delivery Due: As shown below

The Series 2019 Bonds will be issuable in fully registered form without coupons in minimum denominations of $5,000 and any multiple of $5,000 in excess thereof. Interest on the Series 2019 Bonds will be payable on each January 1 and July 1, commencing July 1, 2019.

MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS AND CUSIPS

SERIES 2019A BONDS

$12,225,000 SERIAL BONDS

DUE PRINCIPAL INTEREST DUE PRINCIPAL INTEREST JULY 1 AMOUNT RATE YIELD CUSIP+ JULY 1 AMOUNT RATE YIELD CUSIP+ 2024 $370,000 4.00% 2.36% 74439YBH3 2031 $ 990,000 5.00% 3.32%* 74439YBQ3 2025 730,000 4.00 2.49 74439YBJ9 2032 1,040,000 5.00 3.39* 74439YBR1 2026 810,000 4.00 2.62 74439YBK6 2033 1,095,000 5.00 3.46* 74439YBS9 2027 840,000 4.00 2.76 74439YBL4 2034 1,150,000 5.00 3.51* 74439YBT7 2028 875,000 4.00 2.90 74439YBM2 2035 1,205,000 5.00 3.57* 74439YCA7 2029 910,000 4.00 3.05* 74439YBN0 2036 1,265,000 5.00 3.63* 74439YCB5 2030 945,000 5.00 3.19* 74439YBP5

TERM BONDS

$4,150,000 4.00% Due July 1, 2039; Yield: 4.05% CUSIP+: 74439YBU4 $8,265,000 5.00% Due July 1, 2044; Yield: 3.83%* CUSIP+: 74439YBV2 $10,365,000 4.125% Due July 1, 2049; Yield: 4.16% CUSIP+: 74439YBW0 $12,910,000 5.00% Due July 1, 2054; Yield: 4.03%* CUSIP+: 74439YBX8 $12,845,000 5.00% Due July 1, 2058; Yield: 4.14%* CUSIP+: 74439YBY6

SERIES 2019B BONDS

$925,000 3.65% Due July 1, 2024; Yield: 3.65% CUSIP+: 74439YBZ3

______* Yield to July 1, 2028 at 100%. + CUSIP is a registered trademark of the American Bankers Association. CUSIP data contained herein is provided by CUSIP Global Services managed by Standard & Poor’s Financial Services LLC on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP Global Services. CUSIP numbers have been assigned by an independent company not affiliated with the Authority, the Underwriter or the Borrower, and are included solely for the convenience of the holders of the Series 2019 Bonds. None of the Authority, the Borrower, or the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Series 2019 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the execution and delivery of the Series 2019 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of the Series 2019 Bonds.

AUTHORITY

Public Finance Authority

UNIVERSITY

Appalachian State University

COUNSEL TO THE UNIVERSITY

Bryant Miller Olive P.A., Orlando, Florida

BORROWER

Beyond Boone, LLC

BOND COUNSEL

McGuireWoods LLP, Raleigh, North Carolina

BORROWER COUNSEL

MacElree Harvey, Ltd, West Chester, Pennsylvania Johnston, Allison & Hord, PA, Charlotte, North Carolina

TRUSTEE

Wilmington Trust, National Association, Birmingham, Alabama

UNDERWRITER

RBC Capital Markets, LLC

UNDERWRITER’S COUNSEL

Parker Poe Adams & Bernstein LLP, Charlotte, North Carolina

FINANCIAL ADVISOR TO THE UNIVERSITY

First Tryon Advisors, Charlotte, North Carolina

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PRELIMINARY NOTICES

This Official Statement does not constitute an offering of any security other than the original offering of the Series 2019 Bonds identified on the cover hereof. No dealer, broker, salesman, or other person has been authorized by the Authority, the Underwriter, the Borrower, or the University to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been given or authorized by any of the foregoing. The information set forth herein has been obtained from the Authority, the Borrower, the University, and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness. The delivery of this Official Statement at any time does not imply that the information herein is correct as of any time subsequent to its date. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the Borrower, or the University since the date hereof.

Assured Guaranty Municipal Corp. (the “Series 2019 Bond Insurer”) makes no representation regarding the Series 2019 Bonds or the advisability of investing in the Series 2019 Bonds. In addition, the Series 2019 Bond Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Series 2019 Bond Insurer supplied by the Series 2019 Bond Insurer and presented under the heading “BOND INSURANCE” herein and in Appendix H – “SPECIMEN MUNICIPAL BOND INSURANCE POLICY” hereto.

The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to prospective purchasers of the Series 2019 Bonds under the federal securities laws as applied to the facts and circumstances of the offering made hereby, but the Underwriter does not guarantee the accuracy or completeness of such information.

Upon issuance, the Series 2019 Bonds will not be registered by the Authority under the Securities Act of 1933, as amended, or the securities law of any state, and will not be listed on any stock or other securities exchange. The Series 2019 Bonds have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”), any stock or other securities exchange, or any agency of any state in which that may be offered. Neither the SEC nor any such stock or other securities exchange or state agency has guaranteed or passed on the safety of the Series 2019 Bonds as an investment, upon the probability of any earnings thereon, or upon the accuracy or adequacy of this Official Statement. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of, the Series 2019 Bonds by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale.

In connection with this offering, the Underwriter may overallot or effect transactions that stabilize or maintain the market price of the Series 2019 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Series 2019 Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering price stated on the cover page hereof and said public offering price may be changed from time to time by the Underwriter.

CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS

This Official Statement contains statements which should be considered “forward-looking statements,” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended, meaning they refer to possible future events or conditions. Such statements are generally identifiable by the words such as “anticipate,” “believe,” “budget,” “estimate,” “expect,” “intend,” “plan,” “forecast,” or similar words.

If and when included in this Official Statement or in documents incorporated herein by reference, the words “projections,” “expects,” “intends,” “anticipates,” and “estimates” and analogous expressions are intended to identify “forward looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. Any such statements, which may include statements contained in “THE SERIES 2019 PROJECT,” “CERTAIN BONDHOLDERS RISKS,” “MARKET STUDIES,” and “CASH FLOW PROJECTION” (including in the appendices hereto) inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. Such risks and uncertainties include, among others, general economic and business conditions; competition; changes in political, social, and economic conditions; regulatory initiatives and compliance with governmental regulations; discovery of previously unknown conditions; and various other events, conditions, and circumstances. These forward looking statements speak only as of the date of this Official Statement. The Authority, the Underwriter, and the Borrower expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward looking statement contained in this Official Statement to

reflect any change in their expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE BORROWER DOES NOT EXPECT OR INTEND TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR.

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TABLE OF CONTENTS

Page

SHORT STATEMENT ...... 1 Purpose of this Official Statement ...... 1 The Authority ...... 1 The Borrower ...... 2 Beyond Owners Group ...... 2 Plan of Finance ...... 2 The Ground Lease and Related Agreements ...... 2 Description of the Series 2019 Bonds ...... 3 The Trustee ...... 4 The University ...... 4 The Development Team ...... 4 Security and Sources of Payment for the Series 2019 Bonds ...... 5 Market Studies ...... 7 Cash Flow Projection ...... 7 Certain Bondholders’ Risks ...... 7 Continuing Disclosure ...... 8 Miscellaneous ...... 8

THE SERIES 2019 BONDS ...... 8 General Description ...... 8 Registration Provisions; Exchange; Replacement ...... 9 Payment of the Series 2019 Bonds ...... 10 Book-Entry System for the Series 2019 Bonds ...... 11 Series 2019 Bonds Are Limited Obligations ...... 12 Redemption ...... 13

THE AUTHORITY ...... 19 Powers ...... 20 Governing Body ...... 20 Resolution; Board Approval ...... 21 Special Limited Obligations ...... 21 Other Obligations ...... 21 Limited Involvement ...... 21

THE UNIVERSITY HOUSING MASTER PLAN ...... 22

THE SERIES 2019 PROJECT ...... 24

ESTIMATED SOURCES AND USES OF FUNDS ...... 25

ANNUAL DEBT SERVICE REQUIREMENTS ...... 26

THE BORROWER ...... 27 General ...... 27 Beyond Owners Group ...... 27

i Page

THE GROUND LEASE AND RELATED AGREEMENTS ...... 28 The Ground Lease ...... 28 The Operating Agreement ...... 37 The Asset Management Agreement ...... 40 The Parking Facility Lease ...... 42

THE UNIVERSITY ...... 44 General ...... 44 Academics and Enrollment ...... 44 Selected Enrollment Data, Fall Semester1 ...... 45 Admissions ...... 46 Annual Fees and Charges ...... 46 Current University Student Housing ...... 46 On-Campus Housing Occupancy ...... 47 Freshman On-Campus Housing ...... 47 On-Campus Housing Policies ...... 48 No Liability With Respect to Payment of the Series 2019 Bonds ...... 48

THE DEVELOPMENT AND THE DEVELOPMENT TEAM ...... 48 The Developer and the Development Agreement ...... 48 The General Contractor ...... 54 The Architect ...... 55

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2019 BONDS ...... 55 Limited Obligations ...... 55 Leasehold Deed of Trust and Security Agreement ...... 55 Pledge of Pledged Revenues ...... 56 Pledge and Assignment of Trust Estate ...... 56 Assignment of Contracts ...... 57 Funds Held under the Indenture ...... 57 Title and Property Insurance ...... 63 Rate Covenant ...... 63 Annual Budget ...... 64 Covenant Regarding Manager ...... 64 Enforceability of Remedies ...... 64 Additional Bonds and Indebtedness ...... 64 Series 2019 Bond Insurer Control ...... 66

BOND INSURANCE ...... 66 Series 2019 Bond Insurance Policy ...... 66 The Series 2019 Bond Insurer ...... 67

CASH FLOW PROJECTION ...... 69

MARKET STUDIES ...... 70

CERTAIN BONDHOLDERS’ RISKS ...... 70 Introduction ...... 70 General Risk Factors ...... 70 Limited Obligations of the Authority ...... 71 Risks of Construction ...... 72

ii Page

Limited Resources ...... 73 Failure to Achieve and Maintain Occupancy Levels and Rents ...... 73 Revenues from Operation of the Series 2019 Project ...... 73 Delinquent and Defaulting Tenants ...... 74 Reliance on the University, as Manager ...... 74 Competition ...... 74 Reliance on the University ...... 74 Risks of Real Estate Investment ...... 75 Risks Associated with the Ground Lease ...... 75 Property Tax Exemption ...... 75 Insurance and Legal Proceedings ...... 76 Bankruptcy ...... 76 Limitations on Enforceability of Remedies ...... 77 Possible Limitations on Security ...... 78 Bond Insurance Risk Factors ...... 78 Limited Value at Foreclosure ...... 80 Additional Bonds ...... 80 Clean-up Costs and Liens under Environmental Statutes ...... 80 Pledge and Assignment of, and Grant of Security Interest in, Future Revenues ...... 80 Risk of Early Redemption ...... 81 Actual Results May Differ from Market Studies and Cash Flow Projection ...... 81 Forward Looking Statements ...... 82 Consequences of Changes in Beyond Owners Group’s Tax Status ...... 82 Effect of Determination of Taxability ...... 83 Taxation of Series 2019 Bonds ...... 83 Risk of Audit by Internal Revenue Service ...... 83 Market and Prices for the Series 2019 Bonds ...... 84

LITIGATION ...... 84 The Authority ...... 84 The Borrower ...... 84

TAX MATTERS ...... 84 Opinion of Bond Counsel – Series 2019A Bonds ...... 84 Reliance and Assumptions; Effect of Certain Changes ...... 85 Original Issue Discount ...... 85 Original Issue Premium ...... 86 Certain Collateral Federal Tax Consequences ...... 86 Audits; Possible Legislative or Regulatory Action ...... 87 Opinion of Bond Counsel – Federal Income Tax Status of Interest – Series 2019B Bonds ...... 87 Summary ...... 87 Tax Status of the Series 2019B Bonds ...... 88 Defeasance ...... 90 Additional Medicare Tax ...... 91

iii Page

UNDERWRITING ...... 91

SPECIAL RELATIONSHIPS ...... 91

RATINGS ...... 91

LEGAL MATTERS AND OTHER ADVISORS ...... 92

CONTINUING DISCLOSURE ...... 93

MISCELLANEOUS ...... 93

APPENDIX A - MARKET STUDIES ...... A-1 APPENDIX B - CASH FLOW PROJECTION ...... B-1 APPENDIX C - DEFINITIONS ...... C-1 APPENDIX D - SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS ...... D-1 APPENDIX E - DTC BOOK-ENTRY SYSTEM ...... F-1 APPENDIX F - PROPOSED FORM OF OPINION OF BOND COUNSEL ...... G-1 APPENDIX G - CONTINUING DISCLOSURE AGREEMENT ...... H-1 APPENDIX H - SPECIMEN MUNICIPAL BOND INSURANCE POLICY ...... I-1

OFFICIAL STATEMENT

RELATING TO:

$61,685,000 PUBLIC FINANCE AUTHORITY STUDENT HOUSING REVENUE BONDS (BEYOND BOONE, LLC – APPALACHIAN STATE UNIVERSITY PROJECT) SERIES 2019

CONSISTING OF:

$60,760,000 $925,000 SERIES 2019A TAXABLE SERIES 2019B

SHORT STATEMENT

This Short Statement contains certain information for quick reference only. Prospective purchasers of the Series 2019 Bonds must read this entire Official Statement, including the appendices thereto, in order to obtain information essential to the making of an informed investment decision. The information set forth in this short statement is subject in all respects to more complete information set forth elsewhere in this Official Statement, which should be read in its entirety.

All capitalized terms used in this Official Statement and not otherwise defined herein have the same meaning as in “DEFINITIONS” in Appendix C hereto and in the hereinafter defined Indenture, Loan Agreement, Leasehold Deed of Trust and Security Agreement included in “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS” in Appendix D hereto. To the extent there are conflicts in defined terms used in this Official Statement, the definitions in the Indenture, Loan Agreement, Assignment of Contracts, Leasehold Deed of Trust and Security Agreement shall control. The descriptions and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of its terms and conditions. All statements herein are qualified in their entirety by reference to each document. The offering of the Series 2019 Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this short statement from this Official Statement or otherwise to use it without this entire Official Statement.

PURPOSE OF THIS OFFICIAL STATEMENT

This Official Statement, which includes the cover page, prefatory information and the appendices, furnishes information in connection with the issuance and sale by the Public Finance Authority (the “Authority”) of (i) $60,760,000 aggregate principal amount of its Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project), Series 2019A (the “Series 2019A Bonds”) and (ii) $925,000 aggregate principal amount of its Taxable Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project), Series 2019B (the “Series 2019B Bonds” and collectively with the Series 2019A Bonds, the “Series 2019 Bonds”).

THE AUTHORITY

The Authority is a joint powers commission and a unit of government and body corporate and politic created under the laws of the State of Wisconsin with the powers, among others, set forth in §§ 66.0301, 66.0303, and 66.0304 of the Wisconsin Statutes, as amended (“Act 205”), and the Joint Exercise of Powers

Agreement Relating to the Public Finance Authority, dated June 30, 2010, as amended by an Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority (as so amended and as may be further amended from time to time, the “Joint Exercise Agreement”) dated September 28, 2010, by and among Adams County, Wisconsin; Bayfield County Wisconsin; Marathon County, Wisconsin; Waupaca County, Wisconsin; and the City of Lancaster, Wisconsin (each, a “Member” and, collectively, the “Members”, which term shall include any political subdivision designated in the future as a “Member” of the Authority pursuant to the Joint Exercise Agreement) to issue bonds to finance a project (such as the Series 2019 Project, as defined herein), including funding a reserve fund and capitalized interest and the payment of costs of issuance and other costs related to the financing and to make loans to, or enter into any other kind of an agreement with a participant or other entity in connection with financing of a project. See “THE AUTHORITY” herein.

THE BORROWER

Beyond Boone, LLC (the “Borrower”) is a single member limited liability company organized and existing under the laws of the State of Delaware. Beyond Owners Group, Inc. (“Beyond Owners Group”) is the sole member of the Borrower. The proceeds of the Series 2019 Bonds (hereinafter defined) will be loaned by the Authority to the Borrower pursuant to a Loan Agreement (the “Loan Agreement”) dated as of February 1, 2019, between the Authority and the Borrower to finance the costs described herein. The Borrower has no assets other than the Series 2019 Project. See “THE BORROWER” herein.

BEYOND OWNERS GROUP

Beyond Owners Group is a non-profit corporation organized and existing under the laws of the Commonwealth of Pennsylvania and is an exempt organization under §501(c)(3) of the Internal Revenue Code of 1986, as amended. See “THE BORROWER” herein. Beyond Owners Group will have no obligation with respect to the hereinafter described Series 2019 Bonds or under the hereinafter described Ground Lease, Loan Agreement, Leasehold Deed of Trust, Security Agreement, Assignment of Contracts, Developer Collateral Assignment, or Indenture. See “THE BORROWER – BEYOND OWNERS GROUP” herein.

PLAN OF FINANCE

The Authority will issue the Series 2019 Bonds for the purpose of providing funds (i) to finance the cost of acquiring, constructing, furnishing, equipping an approximately 590-bed student housing facility (“Building 100”), a structured parking garage with approximately 477 spaces (the “Parking Facility”), associated site development and off-site infrastructure improvements, including, but not limited to, grading, street and sidewalk improvements and utility infrastructure (collectively, the “Offsite Improvements,” and together with Building 100 and the Parking Facility, the “Series 2019 Project”) to be located on that portion of the campus of Appalachian State University (the “University”) that has been designated as a “Millennial Campus” pursuant to Article 21B of Chapter 116 of the General Statutes of North Carolina, as amended (the “Millennial Campus”) in the Town of Boone, North Carolina (the “Project Jurisdiction”), (ii) to fund capitalized interest on the Series 2019 Bonds during construction of the Series 2019 Project and for a period of six months thereafter, (iii) to fund the Debt Service Reserve Fund for the Series 2019 Bonds, (iv) to pay the premiums for the Series 2019 Bond Insurance Policy and the Series 2019A Reserve Policy (each as hereinafter defined), and (v) to pay the costs of issuing the 2019 Bonds.

THE GROUND LEASE AND RELATED AGREEMENTS

The Ground Lease. The site on which Building 100 and the Parking Facility will be constructed (the “Property,” and together with Building 100 and the Parking Facility, the “Premises”) is located on the Millennial Campus of the University and will be leased to the Borrower pursuant to a Ground Lease

Agreement (the “Ground Lease”) dated as of the date of issuance of the Series 2019 Bonds, between the State of North Carolina by and through the University under authority delegated by the Board of Governors of the University of North Carolina, as ground lessor (the “Ground Lessor”), and the Borrower, as ground lessee. Pursuant to the Ground Lease, the University will lease the Property to the Borrower, for a term of 50 years. The annual rental payable under the Ground Lease will be equal to the Net Available Cash Flow. Net Available Cash Flow will equal the amount transferred from time to time to the Surplus Fund created under the Indenture between the Authority and the Trustee, less any amounts required or permitted to be withdrawn or transferred therefrom in accordance with the provisions of the Indenture. Under the terms of the Ground Lease, the Ground Lessor agrees, through the University, that Building 100 and any additional student housing facilities financed with Additional Bonds issued pursuant to the Indenture (the “Student Housing Facilities”) will be treated at all times as part of and on an equal basis with the University's on-campus housing stock regularly made available to its students, whether or not the Student Housing Facilities are managed by the University. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - THE INDENTURE -- Revenue Fund” in Appendix D hereto for a more detailed description of the amounts to be deposited, from time to time, in the Surplus Fund, and see “THE GROUND LEASE AND RELATED AGREEMENTS – THE GROUND LEASE” herein for a description of the terms of the Ground Lease and the University’s commitments with respect to the Student Housing Facilities. The Parking Facility located on the premises described in the Ground Lease will be subject to the Parking Facility Lease (as defined herein) between the Borrower, as lessor, and the University, as lessee.

The Operating Agreement. On or about the date of issuance of the Series 2019 Bonds, the University and the Borrower will enter into an Operating Agreement (the “Operating Agreement”), pursuant to which the Borrower will engage the University to provide administrative services and day to day maintenance services with respect to the Student Housing Facilities including programmatic, administrative, and academic services related to residential life and education functions, marketing, assignment, billing and collection activities related to contracting of residential units.

The Asset Management Agreement. On or about the date of issuance of the Series 2019 Bonds, the University and the Borrower will enter into an Asset Management Agreement (the “Asset Management Agreement”) pursuant to which the Borrower will agree to maintain, repair, and potentially rehabilitate, replace and renovate the Student Housing Facilities.

The Parking Facility Lease. Upon the execution of the Ground Lease, the Borrower and the University will enter into the Facility Lease for the Parking Facility (the “Parking Facility Lease”), whereby the University will lease the Parking Facility from the Borrower for a ten-year initial term.

DESCRIPTION OF THE SERIES 2019 BONDS

Redemption. The Series 2019 Bonds are subject to redemption prior to their stated maturity. See “THE SERIES 2019 BONDS – REDEMPTION” herein.

Denominations. The Series 2019 Bonds are issuable in denominations of $5,000 or any multiple of $5,000 in excess thereof. See “THE SERIES 2019 BONDS” herein.

Registration, Transfers and Exchanges. The Series 2019 Bonds will be issued in fully registered form and will initially be in book-entry form through The Depository Trust Company (“DTC”). Bondholders will not receive a certificate representing their Series 2019 Bonds except in very limited circumstances. When in book-entry form, ownership of Series 2019 Bonds held by DTC or its nominee, Cede & Co., on behalf of the beneficial owners thereof (the “Beneficial Owners”), and beneficial ownership may be transferred upon delivery to DTC (or its nominee, Cede & Co.) of an assignment duly executed by the Beneficial Owner or his duly authorized attorney or legal representative. See “THE SERIES 2019 BONDS” herein.

Payments. Interest on the Series 2019 Bonds is payable on January 1 and July 1 of each year (each such date, an “Interest Payment Date”), commencing July 1, 2019. Payment of the principal of and interest on the Series 2019 Bonds will be made by the Trustee directly to Cede & Co., as nominee of DTC, and will subsequently be disbursed to DTC Participants (as defined in “DTC BOOK-ENTRY SYSTEM” in Appendix E hereto) and thereafter to Beneficial Owners of the Series 2019 Bonds. If and when not in book- entry form, interest on the Series 2019 Bonds is payable by check or draft mailed by first class mail on the date due to the owners thereof as shown on the books and records of the Trustee as of the close of business on the 15th day of the calendar month immediately preceding each Interest Payment Date (the “Regular Record Date”). If and when not in book-entry form, interest on the Series 2019 Bonds is payable to any registered owner of more than $500,000 in aggregate principal amount of the Series 2019 Bonds by wire transfer to such registered owner if written notice is given to the Bond Trustee not less than five (5) days prior to the Regular Record Date or the Special Record Date, as applicable. If and when not in book-entry form, principal of and premium, if any, on the Series 2019 Bonds is payable upon surrender thereof at the corporate trust office of the Bond Trustee. See “DTC BOOK-ENTRY SYSTEM” in Appendix E hereto.

Tax Exemption. Upon issuance of the Series 2019 Bonds, McGuireWoods LLP, Raleigh, North Carolina, as Bond Counsel, will provide an opinion, substantially in the form contained in Appendix F to this Official Statement as to the tax status of the Series 2019 Bonds.

For a more complete description of the Series 2019 Bonds, see “THE SERIES 2019 BONDS” herein.

THE TRUSTEE

Wilmington Trust, National Association, Birmingham, Alabama will act as trustee, bond registrar, and paying agent for the Series 2019 Bonds.

THE UNIVERSITY

The University is located in Boone, North Carolina and is an institution of higher learning and a member of the University of North Carolina System. Student enrollment (headcount) for Fall of 2018 was 19,108. See “THE UNIVERSITY” herein. Current housing at the University consists of 20 housing facilities for students, including options styled as apartments, hotels, traditional dormitories and suites (the “Housing Stock”). See “THE UNIVERSITY - HOUSING” herein. Neither the State of North Carolina nor the University will have any obligation with respect to payment of the Series 2019 Bonds.

The University will also enter into an Operating Agreement with the Borrower pursuant to which it will agree to manage the Student Housing Facilities.

THE DEVELOPMENT TEAM

The Developer and the Development Agreement. RISE Boone, LLC, a Georgia limited liability company (the “Developer”), wholly owned affiliate of Rise Development, LLC, a Georgia limited liability company, will serve as the developer for the Series 2019 Project pursuant to a Development Agreement dated as of February 1, 2019 (the “Development Agreement”) between the Borrower and the Developer. See “THE SERIES 2019 PROJECT – THE DEVELOPER” herein. The Development Agreement will set forth certain terms and conditions relating to the development of the Series 2019 Project. The Development Agreement will obligate the Developer to cause the Series 2019 Project to be designed, permitted, constructed, furnished and equipped for a total cost and the by the completion dates identified therein.

The Architect. Niles Bolton Associates, Inc. (the “Architect”) will serve as the Architect for the Series 2019 Project. See “THE SERIES 2019 PROJECT – THE ARCHITECT” herein. The Developer has

entered into an agreement (the “Architect’s Agreement”) with the Architect relating to the Series 2019 Project.

The General Contractor. The Developer and Choate Construction Company (the “General Contractor”) will enter into a construction contract (the “Construction Agreement”) pursuant to which the General Contractor will agree to construct the Series 2019 Project. See “THE SERIES 2019 PROJECT – THE GENERAL CONTRACTOR” herein.

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2019 BONDS

Loan Agreement. Pursuant to the Loan Agreement, the Borrower agrees to make loan payments to the Trustee in such amounts as will be sufficient to pay, when due, the principal or redemption price of and interest on the Series 2019 Bonds. The Borrower’s payment obligations with respect to the Series 2019 Bonds under the Loan Agreement will be a nonrecourse obligation of the Borrower. Beyond Owners Group will have no obligation with respect to the Series 2019 Bonds.

Pursuant to the Indenture, the Authority will assign to the Trustee all of its right, title and interest in and to, and remedies under, the Loan Agreement, except for certain reserved rights, including rights to reimbursement of expenses and indemnification (as further defined herein, the “Unassigned Rights”). To evidence the obligation to pay loan payments sufficient to pay the Debt Service Payments on the Series 2019A Bonds, the Borrower has executed and delivered to the Authority its promissory note (the “Series 2019A Note”), and to evidence the obligation to pay loan payments sufficient to pay the Debt Service Payments on the Series 2019B Bonds, the Borrower has executed and delivered to the Authority its promissory note (the “Series 2019B Note,” and together with the Series 2019A Note, the “Series 2019 Notes”), and the Authority has endorsed the Series 2019 Notes to the order of the Trustee. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS – THE LOAN AGREEMENT” in Appendix D hereto.

Indenture. As security for its obligations under the Series 2019 Bonds, the Authority will enter into the Indenture with the Trustee. Pursuant to the Indenture, the Authority will pledge, assign and grant to the Trustee a first priority security interest in the Loan Agreement, the Series 2019 Notes, all property described therein, all amounts to be received thereunder, and all property to be held thereunder (except for Unassigned Rights hereinafter defined).

Pledged Revenues. The Series 2019 Notes will constitute obligations of the Borrower to pay amounts sufficient to pay principal or redemption price of and interest on the Series 2019 Bonds. The Series 2019 Notes will be secured by a pledge, assignment and grant of a security interest in the Pledged Revenues and the funds established under the Indenture.

Leasehold Deed of Trust; Security Agreement; Assignment of Contracts; Developer Collateral Assignment. To secure the Borrower’s obligations to the Authority under the Loan Agreement and the Series 2019 Notes, the Borrower will execute and deliver to the Trustee:

(i) a Leasehold Deed of Trust, Fixture Filing, and Assignment of Rents and Subleases (the “Leasehold Deed of Trust”) dated as of February 1, 2019, pursuant to which the Borrower will, subject to Permitted Encumbrances, grant to the deed of trust trustee named therein (the “Deed of Trust Trustee”) for the benefit of the Trustee all of its right, title and interest in the Borrower’s leasehold interest in Building 100 and the Parking Facility and the Property on which they are located, and assign and pledge to the Deed of Trust Trustee for the benefit of the Trustee, the Borrower’s interest in the leases, rents, issues, profits, revenues, income, receipts, money, royalties, right and benefits of and derived from Building 100 and the Parking Facility;

(ii) a Pledge and Security Agreement (the “Security Agreement”) dated as of February 1, 2019, pursuant to which the Borrower will grant to the Trustee a first priority security interest in its interest in the accounts, documents, chattel paper, instruments, and general intangibles arising in any manner from the Borrower’s ownership or operation of Building 100 and the Parking Facility and any improvements thereto or expansions thereof, in the personal property of the Borrower that is part of Building 100 and the Parking Facility, including, without limitation, the Inventory and the Equipment (each as defined in the Indenture); and

(iii) a Collateral Assignment of Contracts (the “Assignment of Contracts”) dated as of February 1, 2019, pursuant to which the Borrower will collaterally assign to the Trustee, inter alia, its rights under the Operating Agreement, the Asset Management Agreement, the Parking Facility Lease, the Developer Collateral Assignment and the Development Agreement.

Additionally, the Developer will collaterally assign to the Borrower, as security for its obligation to perform under the Development Agreement, its rights under the Construction Agreement, the Architect’s Contract and any other contracts and agreements, if any, relating to the construction of the Series 2019 Project (collectively, the “Construction Contracts”) pursuant to a Developer Collateral Assignment Agreement (the “Developer Collateral Assignment”), dated as of February 1, 2019 from the Developer in favor of the Borrower. Pursuant to the Collateral Assignment of Contract, the Borrower has assigned its rights under the Developer Collateral Assignment to the Trustee.

Debt Service Reserve Fund. A debt service reserve fund (the “Debt Service Reserve Fund”) is created pursuant to the Indenture, within which will be created a Tax-Exempt Account and a Taxable Account. The Tax-Exempt Account of the Debt Service Reserve Fund will be partially funded from proceeds of the Series 2019A Bonds. In addition, the Borrower will provide a Series 2019A Reserve Policy in an amount equal to half of the Debt Service Reserve Requirement for the Series 2019A Bonds. The Tax- Exempt Account of the Debt Service Reserve Fund will be used to pay the Debt Service Payments on the Series 2019A Bonds if insufficient funds are on deposit with the Trustee on the date such payments on the Series 2019A Bonds are due. The Taxable Account of the Debt Service Reserve Fund will be funded with proceeds of the Series 2019B Bonds in an amount equal to the Debt Service Reserve Requirement for the Series 2019B Bonds, and will be used to pay the Debt Service Payments on the Series 2019B Bonds if insufficient funds are on deposit with the Trustee on the date such payments on the Series 2019B Bonds are due. The Tax-Exempt Account of the Debt Service Reserve Fund secures only the Series 2019A Bonds and the Taxable Account of the Debt Service Reserve Fund secures only the Series 2019B Bonds.

Once the Series 2019B Bonds are no longer Outstanding under the Indenture, it is expected that funds on deposit in the Taxable Account of the Debt Service Reserve Fund will be transferred to the Tax- Exempt Account. The Debt Service Reserve Requirement for the Series 2019A Bonds and the Series 2019B Bonds in aggregate shall not exceed the lesser of (a) 10% of the stated principal amount thereof (less any original issue discount that exceeds a de minimis amount), (b) 125% of the average Annual Debt Service thereon from the date of calculation to the final maturity thereof, (c) the Maximum Annual Debt Service thereon, or (d) such lesser sum as required by the Code and the Regulations to ensure the exclusion of the interest on any Tax-Exempt Bonds from the gross income of the Owners thereof for federal income tax purposes. See “ESTIMATED SOURCES AND USES OF FUNDS,” “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2019 BONDS” and “CERTAIN BONDHOLDERS’ RISKS” herein.

Bond Insurance. The scheduled payment of principal of and interest on the Series 2019 Bonds when due will be guaranteed under an insurance policy (the “Series 2019 Bond Insurance Policy”) to be issued concurrently with the delivery of the Series 2019 Bonds by Assured Guaranty Municipal Corp. (the “Series 2019 Bond Insurer”). See “BOND INSURANCE” herein, “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS – References to the Series 2019 Bond Insurance Policy; Consents, Etc.” in Appendix D hereto, and Appendix H – “SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”

The Series 2019 Bond Insurer will also issue the Municipal Bond Debt Service Reserve Insurance Policy (the “Series 2019A Reserve Policy”) which will provide funding for 50% of the Debt Service Reserve Requirement for the Series 2019A Bonds.

MARKET STUDIES

Two market studies (collectively, the “Market Studies”) were performed in connection with the issuance of the Series 2019 Bonds – one prepared by Brailsford & Dunlavey (“B&D”) and a second prepared by MGT of America Consulting, LLC (“MGT”) See “MARKET STUDIES” in Appendix A hereto, “CERTAIN BONDHOLDERS’ RISKS - Actual Results May Differ from Market Studies and Cash Flow Projection” and “- PRELIMINARY NOTICES – CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS” herein. The Market Studies should be read in their entirety.

CASH FLOW PROJECTION

The Cash Flow Projection (the “Cash Flow Projection”) relating to the Series 2019 Project’s ability to generate revenues from the operations sufficient to pay principal of and interest on the Series 2019 Bonds has been prepared based on operating budgets formulated by the Developer. The Cash Flow Projection has not been reviewed, examined or compiled by an accountant. The Authority makes no representation with respect to the Cash Flow Projection and the Underwriter makes no representation for the accuracy of the Cash Flow Projection.

See “CASH FLOW PROJECTION” in Appendix B attached hereto and “CERTAIN BONDHOLDERS’ RISKS - Actual Results May Differ from Market Studies and Cash Flow Projection” and “PRELIMINARY NOTICES – CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS” herein.

CERTAIN BONDHOLDERS’ RISKS

A PROSPECTIVE BONDHOLDER IS ADVISED TO READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING THE APPENDICES HERETO, BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE SERIES 2019 BONDS. SPECIAL REFERENCE IS MADE TO THE SECTIONS “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2019 BONDS” AND “CERTAIN BONDHOLDERS’ RISKS” HEREIN FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SERIES 2019 BONDS. Careful consideration should be given to these risks and other risks described elsewhere in this Official Statement as well as other risks that are typical with respect to similar offerings. Among other things, because the Series 2019 Bonds are payable solely from the revenues and assets of the Borrower and other money pledged to such payment, careful evaluation should be made of the adverse effects from a wide variety of future events and conditions including construction risks, a decline in the enrollment of the University, increased competition from other schools and other student housing facilities on or near the campus of the University, loss of accreditation, failure to meet federal guidelines or some other event that results in students being ineligible for federal financial aid, and cost overruns in connection with the Series 2019 Project or other capital improvements, that may adversely and materially affect the ability of the Borrower to generate sufficient Revenues to pay its expenses of operation, including the principal or redemption price of and interest on the Series 2019 Bonds. In addition, the Market Studies and the Cash Flow Projection are based on assumptions concerning future events, circumstances, and transactions, and it is likely that actual results will be different from the results projected in the Market Studies and the Cash Flow Projection and those differences may be material and adverse. See “PRELIMINARY NOTICES - CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING STATEMENTS” herein. The foregoing risks are not intended to be exhaustive, but include certain major factors that should be considered

by prospective purchasers along with other factors set forth elsewhere in this Official Statement, including the Appendices hereto.

CONTINUING DISCLOSURE

The Borrower will agree to provide such information as may be required by the provisions of Rule 15c2-12 (“Rule 15c2-12”) promulgated by the Securities and Exchange Commission, and neither the University nor the Authority will undertake any responsibility with respect to continuing disclosure under Rule 15c2-12. See “CONTINUING DISCLOSURE AGREEMENT” in Appendix G hereto for a more detailed description of disclosure requirements of the Borrower.

MISCELLANEOUS

This Official Statement speaks only as of its date, and the information contained herein is subject to change. Copies of the Official Statement in final form will be provided to the Municipal Securities Rulemaking Board for availability to the public on its Electronic Municipal Market Access web site known as EMMA. Copies of the Official Statement and other relevant documents and information regarding the documents are available upon request from the Underwriter prior to the issuance and delivery of the Series 2019 Bonds and from the Trustee after the issuance and delivery of the Series 2019 Bonds. The Official Statement, including the cover page and the attached Appendices, contains specific information relating to the Series 2019 Bonds, the Authority, the University, the Series 2019 Project and the Borrower and other information pertinent to the Series 2019 Bonds described herein. Persons considering purchasing the Series 2019 Bonds should review carefully the Appendices attached hereto as well as copies of such documents, which prior to the issuance of the Series 2019 Bonds may be obtained from the Underwriter and, following the issuance of the Series 2019 Bonds, will be held by the Trustee at its designated corporate trust office.

The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Official Statement, including the Appendices, must be considered in its entirety. This Official Statement speaks only as of its date and the information herein is subject to change without notice.

This Official Statement and the Appendices hereto contain brief descriptions of, among other matters, the Authority, the Borrower, the Developer, the Ground Lease, the Indenture, the Loan Agreement, the Series 2019 Bonds, the Series 2019 Project and the University. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Ground Lease, the Loan Agreement, the Leasehold Deed of Trust, the Security Agreement, the Assignment of Contracts, the Developer Collateral Assignment and the Indenture are qualified in their entirety by reference to such documents, and references herein to the Series 2019 Bonds are qualified in their entirety to the forms thereof included in the Indenture.

THE SERIES 2019 BONDS

GENERAL DESCRIPTION

The Series 2019 Bonds will be dated the Closing Date, and will mature on July 1 as set forth on the inside cover hereof, subject to mandatory redemption provisions.

The Series 2019A Bonds and the Series 2019B Bonds will be issued on a parity basis and, except as to tax-exempt status, principal amounts, and maturities, have substantially the same terms. The Series 2019 Bonds will bear interest at the rates and will be sold at prices to bear the yields shown on the inside cover of this Official Statement. Interest on the Series 2019 Bonds will be payable on July 1, 2019 and semi-annually thereafter on January 1 and July 1 (collectively, the “Interest Payment Dates” and each, an “Interest Payment Date”) until paid, in an amount equal to the interest accrued from the Interest Payment Date immediately

preceding the date of registration and authentication of each Series 2019 Bond, unless such Series 2019 Bond is registered and authenticated as of an Interest Payment Date, in which event, it will bear interest from said Interest Payment Date, or unless such Series 2019 Bond is registered and authenticated prior to June 15, 2019, in which event, such Series 2019 Bond will bear interest from the Closing Date. If, as shown by the records of the Trustee, interest on the Series 2019 Bonds shall be in default, such Series 2019 Bond will bear interest from the date to which interest shall have been paid in full on such Series 2019 Bond; or if no interest shall have been paid on the Series 2019 Bonds, such Series 2019 Bond will bear interest from the Closing Date.

Interest on the Series 2019 Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. The Series 2019 Bonds will be issued as fully registered bonds without coupons in the denominations of $5,000 and any multiple thereof (“Authorized Denominations”). Notwithstanding any provision described herein to the contrary, at no time, whether as a result of an Event of Default or otherwise, will the interest rate on the Bonds exceed the Maximum Interest Rate.

The Series 2019 Bonds will be initially registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Series 2019 Bonds and purchasers of the Series 2019 Bonds will not receive certificates evidencing their ownership interests therein. So long as Cede & Co. is the registered owner of the Series 2019 Bonds as nominee of DTC, references herein to the Owners of the Series 2019 Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the Series 2019 Bonds. So long as Cede & Co. is the registered owner of the Series 2019 Bonds, the Debt Service Payments on the Series 2019 Bonds will be made to Cede & Co., as nominee for DTC, which will in turn remit such Debt Service Payments to the Direct Participants and Indirect Participants for subsequent disbursement to the beneficial owners. See “DTC BOOK-ENTRY SYSTEM” in Appendix E attached hereto

REGISTRATION PROVISIONS; EXCHANGE; REPLACEMENT

The Series 2019 Bonds will be and will have all the qualities and incidents of negotiable instruments under the laws of the State of North Carolina, and the Bondholders, in accepting any of the Series 2019 Bonds, will be conclusively deemed to have agreed that the Series 2019 Bonds will be and have all of said qualities and incidents of negotiable instruments.

The Authority will be required to cause the Bond Register to be kept by the Trustee which will be appointed the Authority’s bond registrar and agent for the transfer and exchange of the Series 2019 Bonds and as such, will be required to maintain the Bond Register. The Trustee, for and on behalf of the Authority, will be required to keep the Bond Register in which will be recorded any and all transfers of ownership of Series 2019 Bonds. No Series 2019 Bonds will be registered to bearer. The Bond Register will be required at all times to comply with all requirements of §149(a) of the Code and all Regulations from time to time promulgated thereunder as may be applicable to the Bond Register. Any Series 2019 Bond may be transferred upon the Bond Register upon surrender thereof at the Office of the Trustee by the Owner in person or by his, her, or its attorney-in-fact or legal representative duly authorized in writing together with a written instrument of transfer in form and with guarantee of signature satisfactory to the Trustee duly executed by the Owner or his, her, or its attorney-in-fact or legal representative duly authorized in writing and upon payment by such Owner of a sum sufficient to cover any governmental tax, fee, or charge required to be paid as provided in the Indenture. Upon any such registration of transfer, the Authority will be required to cause to be executed and the Trustee will be required to authenticate and deliver in the name of the transferee a new fully registered Series 2019 Bond or Series 2019 Bonds of like tenor; in Authorized Denominations; of the same Subseries, maturity or maturities, and interest rate or rates; and in the same aggregate principal amount, and the Trustee will be required to enter the transfer of ownership in the Bond Register. No transfer of any Series 2019 Bond will be effective until entered on the Bond Register. Notwithstanding the foregoing, for so long as Bonds of a Series or Subseries shall be held under the

Book-Entry System, transfers of beneficial ownership will be effected pursuant to rules and procedures established by the Securities Depository.

Any Series 2019 Bonds, upon surrender thereof at the Office of the Trustee together with a written instrument of transfer in form and with guarantee of signature satisfactory to the Trustee, duly executed by the Owner or his, her, or its attorney-in-fact or legal representative duly authorized in writing, may be exchanged, at the option of the Owner thereof; and upon payment by such Owner of a sum sufficient to cover any shipping charge, insurance premium, governmental tax, fee, or charge required to be paid as provided in the Indenture, when not prohibited by law, for an equal aggregate principal amount of Series 2019 Bonds of the same Subseries, interest rate, designation, and maturity or maturities and in any other Authorized Denominations and registered in the name of the same Owner. The Authority will cause to be executed and the Trustee will authenticate and deliver Series 2019 Bonds that the Owner making the exchange is entitled to receive, bearing numbers not then outstanding, and the Trustee, as bond registrar, shall enter the exchange in the Bond Register.

Except as provided in the Indenture with respect to exchanges for certain temporary Series 2019 Bonds, the cost of printing, lithographing, and engraving of all Series 2019 Bonds will be deemed to be an Ordinary Expense of the Trustee, and there will be no charge to any Owner for the registration, exchange, or transfer of Series 2019 Bonds, although in each case, the Trustee may require the payment by the Owner requesting exchange or transfer of any tax, fee, or other governmental charge required to be paid with respect thereto and may require that such amount be paid before any such new Series 2019 Bond shall be delivered.

The Authority and the Trustee may deem and treat the Owner of any Series 2019 Bond as the absolute owner of such Series 2019 Bond for the purpose of receiving any payment on such Series 2019 Bond and for all other purposes of the Indenture and the Loan Agreement, whether such Series 2019 Bond shall be overdue or not, and neither the Authority nor the Trustee will be affected by any notice to the contrary. Payment of or on account of the Debt Service Payments on any Series 2019 Bond will be made to or upon the written order of the applicable Owner or his, her, or its attorney-in-fact or legal representative duly authorized in writing. All such payments will be valid and effectual to satisfy and discharge the liability upon such Series 2019 Bond to the extent of the sum or sums so paid.

New Series 2019 Bonds delivered upon any transfer or exchange will be valid special limited obligations of the Authority, evidencing the same obligation as the Series 2019 Bonds surrendered, will be secured by the Indenture and will be entitled to all of the security and benefits thereof to the same extent as the Series 2019 Bonds (or portions thereof) surrendered. The Trustee will not be required to transfer or exchange any Series 2019 Bonds (a) after the notice calling such Series 2019 Bond, (or portion thereof) for redemption shall have been given as provided in the Indenture or (b) during the period beginning at the opening of business on the 15th day (whether or not a Business Day) immediately preceding either any Interest Payment Date or any date of selection of Series 2019 Bonds to be redeemed and ending at the close of business on the Interest Payment Date or day on which the applicable notice of redemption is given.

PAYMENT OF THE SERIES 2019 BONDS

In the event that the DTC Book-Entry System described in Appendix E hereto shall be discontinued, principal of and premium, if any, on the Series 2019 Bonds will be payable by check or draft at maturity or at a date set for prior redemption at the Office of the Trustee to the registered owner of each Series 2019 Bond upon presentation and surrender of the Series 2019 Bonds being paid or redeemed. Interest on each Series 2019 Bond will be paid by check or draft mailed to the Person in whose name such Series 2019 Bond is registered, at his, her, or its address as it appears on the Bond Register as of the close of business on the Regular Record Date for such payment, irrespective of any transfer or exchange of the Series 2019 Bond subsequent to a Regular Record Date and prior to such Interest Payment Date, by the Person in whose name the Series 2019 Bond is registered. At the option of the Owner of not less than $500,000 in aggregate

principal amount outstanding of Bonds of any Subseries issued under and secured by the Indenture, interest will be paid by wire transfer in immediately available funds in accordance with written wire transfer instructions filed with the Trustee not less than five days prior to the close of business on the Regular Record Date or the Special Record Date, as applicable. Interest will continue to be paid in accordance with such instructions, until revoked in writing by the Owner, except for the final payment of interest upon maturity or redemption prior to maturity which will be paid only upon presentation of the Series 2019 Bond to the Trustee. Notwithstanding any provision described to the contrary, at no time, whether as a result of an Event of Default or otherwise, will the interest rate on any Series 2019 Bond exceed the Maximum Interest Rate. Notwithstanding anything to the contrary described under this heading, while a Securities Depository or its nominee is the Owner of Bonds of a Series or Subseries, all Debt Service Payments thereon will be paid to the Securities Depository or its nominee in accordance with the Letter of Representations.

BOOK-ENTRY SYSTEM FOR THE SERIES 2019 BONDS

Notwithstanding any other provision hereof, the Series 2019 Bonds, and, except as described under this heading, any Additional Bonds shall be initially issued in the form of a separate single certificated fully registered Bond for each of the maturities set forth in the Indenture. Except as described under this heading, upon initial issuance, the ownership of each Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC. Except as described under this heading, all of the Outstanding Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.

With respect to Bonds registered in the Bond Register in the name of the Securities Depository or its nominee, the Authority, the Borrower, and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which a Participant holds an interest in the Series 2019 Bonds. Without limiting the immediately preceding sentence, neither the Authority, the Borrower, nor the Trustee shall have responsibility or obligation with respect to (i) the accuracy of the records of the Securities Depository, its nominee, or any Participant with respect to any ownership interest in the Series 2019 Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner, or any notice with respect to the Series 2019 Bonds, including any notice of redemption, or (iii) the payment to any Participant or any other Person, other than an Owner, of any amount with respect to principal of, premium, if any, or interest on, the Series 2019 Bonds. The Authority, the Borrower, and the Trustee may treat and consider the Person in whose name each Bond is registered in the Bond Register as the absolute owner of such Bond for the purpose of payment of principal, premium, and interest with respect to such Bond, for the purpose of giving notices of redemption, for the purpose of obtaining consents, and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Series 2019 Bonds only to or upon the order of the respective Owners or their respective attorneys duly authorized in writing, as provided in Section 207 of the Indenture, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal of, premium, if any, and interest on the Series 2019 Bonds to the extent of the sum or sums so paid. No Person other than an Owner shall receive a certificated Bond evidencing the obligation to make payments of principal, premium, if any, and interest pursuant to the Indenture. While DTC is the Securities Depository, upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to Regular Record Dates, the words “Cede & Co.” in the Indenture shall refer to such new nominee of DTC.

The Trustee shall take all action necessary for all representations of the Authority in the Letter of Representations with respect to the paying agents and the bond registrar, respectively, to at all times to be complied with.

The Securities Depository may determine to discontinue providing its services with respect to the Series 2019 Bonds at any time by giving notice to the Authority, the Borrower, and the Trustee and

discharging its responsibilities with respect thereto under applicable law. The Trustee, in its sole discretion and without the consent of any other Person, may terminate the services of the Securities Depository with respect to the Series 2019 Bonds if the Trustee shall determine that: the Securities Depository is unable to discharge its responsibilities with respect to the Series 2019 Bonds, or a continuation of the requirement that all of the Outstanding Bonds be registered in the Bond Register in the name of the Securities Depository or its nominee is not in the best interest of the Beneficial Owners of the Series 2019 Bonds

Upon the termination of the services of a Securities Depository with respect to the Series 2019 Bonds described above or upon the discontinuance or termination of the services of a Securities Depository with respect to the Series 2019 Bonds described above after which no substitute Securities Depository willing to undertake the functions of DTC hereunder can be found that, in the opinion of the Trustee, shall be willing and able to undertake such functions upon reasonable and customary terms, the Trustee shall deliver Bond certificates at the expense of the Beneficial Owners of the Series 2019 Bonds, as described in the Indenture, and the Series 2019 Bonds shall no longer be restricted to being registered in the Bond Register in the name of the Securities Depository or its nominee, but may be registered in whatever name or names Owners transferring or exchanging Bonds shall designate, in accordance with the provisions of the Indenture.

Notwithstanding any other provision of the Indenture to the contrary, so long as any Series 2019 Bond is registered in the name of the Securities Depository or its nominee, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Letter of Representations.

See “DTC BOOK-ENTRY SYSTEM” in Appendix E hereto.

SERIES 2019 BONDS ARE LIMITED OBLIGATIONS

The Series 2019 Bonds are special limited obligations of the Authority payable solely from the Trust Estate and, except from such source, none of the Authority, any Member, any Sponsor, any Authority Indemnified Person (each as defined in the Indenture), the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Series 2019 Bonds is obligated to pay the principal of, premium, if any, or interest thereon or any costs incidental thereto. The Series 2019 Bonds are not a debt of the State of Wisconsin or any Member and do not, directly, indirectly or contingently, obligate, in any manner, any member, the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Series 2019 Bonds to levy any tax or to make any appropriation for payment of the principal of, premium, if any, or interest on the Series 2019 Bonds or any costs incidental thereto. Neither the faith and credit nor the taxing power of any Member, the State of Wisconsin or any political subdivision or agency thereof or any political subdivision approving the issuance of the Series 2019 Bonds, nor the faith and credit of the Authority, any Sponsor or any Authority Indemnified Person, will be pledged to the payment of the principal of, premium, if any, or interest on, the Series 2019 Bonds or any costs incidental thereto. The Authority has no taxing power.

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REDEMPTION

Optional Redemption.

Series 2019A Bonds. The Series 2019A Bonds maturing on or after July 1, 2029 will be subject to redemption prior to maturity at the option of the Authority upon the written request of the Borrower to the Trustee on and after July 1, 2028, in whole or in part, on any date at a Redemption Price equal to 100% of the principal amount thereof being redeemed plus interest accrued to the redemption date. On the delivery of such written request by the Borrower to the Trustee, the Authority is deemed, without any action on the Authority’s part, to have exercised its option to redeem the Series 2019A Bonds as described under this heading of “Optional Redemption.” Any optional redemption of Series 2019A Bonds will be conditioned upon the Trustee’s receipt of funds sufficient to pay the Redemption Price of the Series 2019A Bonds to be redeemed on or prior to the redemption date.

Series 2019B Bonds. The Series 2019B Bonds are not subject to optional redemption prior to maturity.

Mandatory Sinking Fund Redemption. The Series 2019A Bonds maturing on July 1, 2039 will be subject to mandatory sinking fund redemption prior to maturity in part at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date, in the following principal amounts (each, a “Sinking Fund Requirement”) and on the dates set forth below:

SERIES 2019A BONDS MATURING ON JULY 1, 2039

JULY 1 OF PRINCIPAL JULY 1 OF PRINCIPAL THE YEAR AMOUNT THE YEAR AMOUNT 2037 $1,330,000 2039* $1,440,000 2038 1,380,000 ______*Maturity Date

The Series 2019A Bonds maturing on July 1, 2044 will be subject to mandatory sinking fund redemption prior to maturity in part at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date, in the following principal amounts (each, a “Sinking Fund Requirement”) and on the dates set forth below:

SERIES 2019A BONDS MATURING ON JULY 1, 2044

JULY 1 OF PRINCIPAL JULY 1 OF PRINCIPAL THE YEAR AMOUNT THE YEAR AMOUNT 2040 $1,495,000 2043 $1,730,000 2041 1,570,000 2044* 1,820,000 2042 1,650,000 ______*Maturity Date

The Series 2019A Bonds maturing on July 1, 2049 will be subject to mandatory sinking fund redemption prior to maturity in part at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date, in the following principal amounts (each, a “Sinking Fund Requirement”) and on the dates set forth below:

SERIES 2019A BONDS MATURING ON JULY 1, 2049

JULY 1 OF PRINCIPAL JULY 1 OF PRINCIPAL THE YEAR AMOUNT THE YEAR AMOUNT 2045 $1,910,000 2048 $2,155,000 2046 1,985,000 2049* 2,245,000 2047 2,070,000 ______*Maturity Date

The Series 2019A Bonds maturing on July 1, 2054 will be subject to mandatory sinking fund redemption prior to maturity in part at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date, in the following principal amounts (each, a “Sinking Fund Requirement”) and on the dates set forth below:

SERIES 2019A BONDS MATURING ON JULY 1, 2054

JULY 1 OF PRINCIPAL JULY 1 OF PRINCIPAL THE YEAR AMOUNT THE YEAR AMOUNT 2050 $2,335,000 2053 $2,705,000 2051 2,455,000 2054* 2,840,000 2052 2,575,000 ______*Maturity Date

The Series 2019A Bonds maturing on July 1, 2058 will be subject to mandatory sinking fund redemption prior to maturity in part at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date, in the following principal amounts (each, a “Sinking Fund Requirement”) and on the dates set forth below:

SERIES 2019A BONDS MATURING ON JULY 1, 2058

JULY 1 OF PRINCIPAL JULY 1 OF PRINCIPAL THE YEAR AMOUNT THE YEAR AMOUNT 2055 $2,980,000 2057 $3,285,000 2056 3,130,000 2058* 3,450,000 ______*Maturity Date

The Series 2019B Bonds maturing on July 1, 2024 will be subject to mandatory sinking fund redemption prior to maturity in part at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date, in the following principal amounts (each, a “Sinking Fund Requirement”) and on the dates set forth below:

SERIES 2019B BONDS MATURING ON JULY 1, 2024

JULY 1 OF PRINCIPAL JULY 1 OF PRINCIPAL THE YEAR AMOUNT THE YEAR AMOUNT 2022 $290,000 2024* $255,000 2023 380,000 ______*Maturity Date

On or before the 45th day immediately preceding any July 1 on which Series 2019A Bonds or Series 2019B Bonds are to be retired pursuant to the applicable Sinking Fund Requirement, the Borrower will be permitted to (i) deliver to the Trustee for cancellation, Series 2019A Bonds or Series 2019B Bonds of the applicable maturity in any aggregate principal amount desired or (ii) receive a credit with respect to the applicable Sinking Fund Requirement for any such Series 2019A Bonds or Series 2019B Bonds, respectively, that before said date have been purchased or redeemed (other than through mandatory Sinking Fund Redemption) and cancelled by the Trustee and not theretofore applied as a credit against such Sinking Fund Requirement. Each such Series 2019A Bond and each such Series 2019B Bond so delivered or previously purchased or redeemed and cancelled by the Trustee will be credited by the Trustee at 100% of the principal amount thereof against the Sinking Fund Requirement for the Series 2019A Bonds and/or Series 2019B Bonds of the applicable maturity on such mandatory sinking fund redemption date, and any excess over such amount will be credited against future applicable Sinking Fund Requirements for such Subseries in such order as may be selected by the Borrower or, in the absence of such selection, in chronological order, and the applicable Sinking Fund Requirements for such Series 2019A Bonds and/or Series 2019B Bonds will be accordingly reduced.

The Borrower will be required, on or before the 45th day immediately preceding each such mandatory sinking fund redemption date for Series 2019 Bonds, to furnish the Trustee with its certificate indicating if and to what extent the provisions of clauses (i) and (ii) in the preceding paragraph are to be availed of with respect to such Sinking Fund Requirement.

Extraordinary Optional Redemption. The Series 2019 Bonds will also be subject to redemption at the option of the Authority upon the written request of the Borrower, in whole if:

(i) Building 100 and the Parking Facility are destroyed or damaged to such an extent that, in the opinion of an Independent Engineer expressed in a certificate filed with the Trustee, the Series 2019 Bonds Insurer and the Authority, (A) Building 100 and the Parking Facility cannot reasonably be restored within a period of 12 months to the condition thereof immediately preceding such destruction or damage, or (B) the Borrower is prevented from carrying on its normal operations thereat for a period of not less than 12 consecutive months, or (C) the cost of restoration or replacement thereof would exceed the Net Proceeds of insurance payable in respect of such destruction or damage; or

(ii) title to, or the temporary use of, a substantial portion of Building 100 and the Parking Facility are taken under the exercise of the power of eminent domain by any governmental authority or Person acting under governmental authority to such an extent that, in the opinion of an Independent Engineer expressed in a certificate filed with the Trustee, the Series 2019 Bond Insurer and the Authority, (A) Building 100 and the Parking Facility cannot be reasonably restored or replaced within a period of 12 months to substantially the condition thereof immediately preceding such taking, or (B) the Borrower is prevented from carrying on its normal operations thereat for a period of not less than 12 consecutive months, or (C) the cost of restoration or replacement thereof would exceed the total amount of compensation for such taking.

The Series 2019 Bonds will also be subject to redemption at the option of the Authority upon the written request of the Borrower, in part in the event of condemnation or destruction of, or partial damage to, only Building 100 or the Parking Facility, or partial condemnation or destruction of, or partial damage to, either of them, from the Net Proceeds received by the Borrower as a result of such taking, destruction, or damage to the extent such Net Proceeds are not used for the restoration of Building 100 or the Parking Facility, as applicable, or for the acquisition of substitute property suitable for the Borrower’s operations at Building 100 or the Parking Facility, as applicable, as such operations were conducted prior to such taking, destruction, or damage, but only, if the Borrower furnishes to the Trustee, the Series 2019 Bond Insurer and the Authority (i) a certificate of an Independent Engineer stating (A) that the property forming a part of Building 100 or the Parking Facility, as applicable, that was taken, destroyed, or damaged is not essential to the Borrower’s use or occupancy of Building 100 or the Parking Facility, as applicable, at substantially the same revenue-producing level as prior to such taking, destruction, or damage, or (B) that Building 100 or the Parking Facility, as applicable, has been restored to a condition substantially equivalent to its condition prior to such taking, destruction, or damage, or (C) that the Borrower has acquired suitable land and improvements that are substantially equivalent to the property forming a part of Building 100 or the Parking Facility that was taken, destroyed, or damaged and (ii) a written report of a Financial Consultant filed with the Trustee, the Series 2019 Bond Insurer and the Authority that the Fixed Charges Coverage Ratio for each of the two (2) Annual Periods following the Annual Period following such taking, destruction, or damage will not be less than the lesser of (a) 1.20 and (b) the average Fixed Charges Coverage Ratio for the two most recent Annual Periods prior to such taking, destruction, or damage for which audited financial statements are available. On the delivery of such written request by the Borrower to the Trustee, the Authority is deemed, without any action on the Authority’s part, to have exercised its option to redeem the Series 2019 Bonds as described under this heading “Extraordinary Optional Redemption.”

If the Series 2019 Bonds shall be called for redemption upon the occurrence of any of the events described in the two immediately preceding paragraphs, the Series 2019 Bonds will be permitted to be redeemed on any date for which the requisite notice of redemption can be given within 180 days of such event at a Redemption Price equal to 100% of the principal amount thereof plus interest accrued to the redemption date.

Subject to the provisions of the Indenture described below under the subheading “Selection of Series 2019 Bonds to be Redeemed,” “DTC Procedures,” and “Redemption of a Portion of a Series 2019 Bond,” any redemption of less than all of the Series 2019 Bonds pursuant to the provisions of the Indenture described under this subheading will be applied against Series 2019A Bonds and the Series 2019B Bonds on a pro rata basis, based on the initial deposits to the Construction Fund created under the Indenture from the proceeds of each such subseries unless, on the date of such redemption, either such subseries shall no longer be Outstanding, in which case, such redemption will be applied solely to the Outstanding subseries.

Other Redemptions at Par. The Series 2019A Bonds will also be subject to redemption prior to maturity in whole or in part at any time and as expeditiously as reasonably possible on the deposit of money in the Redemption Fund required by the Loan Agreement or the Indenture as set forth below in a principal amount equal to such deposit (less any amount by which such deposit exceeds an Authorized Denomination)

and at a Redemption Price equal to 100% of such principal amount plus interest accrued thereon to the redemption date:

(i) any net proceeds of title insurance on Building 100 or the Parking Facility to the extent such Net Proceeds are not used to acquire or construct replacement or substitute property and which are paid to the Trustee for deposit to the Redemption Fund; or

(ii) any net proceeds of a sale or disposition of any inadequate, obsolete, worn out, unsuitable, undesirable, or unnecessary Equipment that is part of the Project to the extent such net proceeds are not used to acquire replacement equipment or related property having equal or greater value or utility (but not necessarily having the same function) in the operation of the Project for the purposes for which they are intended and which are paid to the Trustee for deposit in the Redemption Fund; or

(iii) any money consideration received by the Trustee pursuant to the provisions of the Leasehold Deed of Trust in connection with the release of, or the subordination of the lien of the Leasehold Deed of Trust with respect to, any portion of Building 100 or the Parking Facility (i) with respect to which the University proposes to convey fee title to a public utility or public body in order that utility services or public services may be provided to Building 100 or the Parking Facility or (ii) with respect to which the Borrower requests the Trustee subordinate the lien of the Leasehold Deed of Trust to rights granted to a public utility or public body in order that utility services or public services may be provided to Building 100 or the Parking Facility pursuant to the provisions of the Leasehold Deed of Trust; or

(iv) the release price for any unimproved portion of the Property released from the lien of the Leasehold Deed of Trust determined and paid to the Trustee pursuant to the provisions of the Leasehold Deed of Trust; or

(v) from unused amounts in an Account of the Construction Fund and subsequently transferred to the Redemption Fund following the date set forth in a written certificate of an Authorized Representative of the Borrower delivered to the Trustee to the effect that no further disbursements will be requested from such Account of the Construction Fund.

Selection of Series 2019 Bonds to be Redeemed. If the Series 2019 Bonds are to be called for redemption (other than through mandatory sinking fund redemption), the Borrower will be permitted to select the maturity of Series 2019 Bonds to be redeemed. Subject to the provisions described below under the heading “Redemption of a Portion of a Series 2019 Bond” if less than all of the Series 2019 Bonds of any maturity are to be called for redemption (other than through mandatory sinking fund redemption), the Trustee will select the particular Series 2019 Bonds of such Series, Subseries, or maturity to be redeemed by lot. Notwithstanding the foregoing, the Borrower will have the right to designate the Sinking Fund Requirement to which such redemption shall be credited, and, if any Insured Series 2019 Bonds are to be called for redemption, the selection of such Insured Series 2019 Bonds is subject to the approval of the Series 2019 Bond Insurer.

DTC Procedures. Investors should note that while DTC is the Owner of the Series 2019 Bonds, partial redemptions of the Series 2019 Bonds will be determined in accordance with DTC’s procedures. The Authority intends that redemption allocations made by DTC, DTC Participants, or such other intermediaries that may exist between the Authority and the Beneficial Owners be made in accordance with the method of selection of Series 2019 Bonds for a partial redemption described herein. However, the selection of the Series 2019 Bonds for redemption in DTC’s book-entry only system is subject to DTC’s practices and procedures as in effect at the time of any such partial redemption. The Authority can provide no assurance that DTC, the DTC Participants, or any other intermediaries will allocate redemptions among Beneficial

Owners in accordance with the method of selection of Series 2019 Bonds for a partial redemption as described above.

Notice of Redemption. In the event any Series 2019 Bonds are called for redemption as aforesaid, notice thereof identifying the Series 2019 Bonds or portions thereof to be redeemed will be given by the Trustee by mailing a copy of the redemption notice by first class mail (postage prepaid) not less than 30 nor more than 60 days prior to the date fixed for redemption to the Series 2019 Bond Insurer and the Owner of each Series 2019 Bond to be redeemed in whole or in part at the address shown on the Bond Register at the close of business on the date of mailing; provided, however, that failure to give such notice by mailing to the Series 2019 Bond Insurer and any Owner of Series 2019 Bonds or any defect therein will not affect the validity of any proceedings for the redemption of any other Series 2019 Bonds for which notice shall have been properly given. Each notice will be required to specify the CUSIP numbers of the Series 2019 Bonds being called; the numbers of the Series 2019 Bonds; if less than all of the Series 2019 Bonds are being called, the redemption date; the Redemption Price; and the place or places where amounts due upon such redemption will be payable. Such notice will be required further to state that payment of the applicable Redemption Price will be made upon presentation and surrender of the Series 2019 Bonds to be redeemed and that on the redemption date, the Redemption Price will become due and payable upon each Series 2019 Bond to be redeemed and that interest thereon will cease to accrue on and after such date, provided collected funds for the redemption of the Series 2019 Bonds to be redeemed are on deposit with the Trustee at the place of, and the time for, payment. Any notice mailed as provided in the Indenture will be conclusively presumed to have been duly given, whether or not the Owner of such Series 2019 Bonds actually receives such notice.

Conditional Notice of Redemption. Any notice of redemption may, upon the written request of the Borrower, state (i) that the redemption to be effected is conditioned upon the receipt by the Trustee on or prior to the redemption date of sufficient and legally available funds to pay the Redemption Price of the Series 2019 Bonds to be redeemed and/or (ii) that the Borrower retains the right to rescind such notice on or prior to the scheduled redemption date and that if such funds shall not be so received or shall not be so legally available or if the notice shall be rescinded, such notice will be of no force or effect and such Series 2019 Bonds will not be required to be redeemed. In the event that such notice shall contain such condition(s) and sufficient legally available funds to pay the Redemption Price of such Series 2019 Bonds shall not be received by the Trustee on or prior to the redemption date or if the notice shall be rescinded on or prior to the redemption date, the redemption will not be made and the Trustee will be required, within a reasonable time thereafter, to give notice, in the manner in which the notice of redemption shall have been given, that such funds were not so received.

Cessation of Interest. On the date fixed for redemption, notice having been given in the manner and under the conditions hereinabove described, the Series 2019 Bonds (or portions thereof) called for redemption will be due and payable on the date fixed for redemption at the Redemption Price provided therefor. On such date, if cash and/or Defeasance Obligations sufficient to pay the Redemption Price of the Series 2019 Bonds (or portions thereof) to be redeemed, are held by the Trustee in trust for the Owners of Series 2019 Bonds (or portions thereof) to be redeemed, interest on the Series 2019 Bonds (or portions thereof) called for redemption will cease to accrue; such Series 2019 Bonds (or portions thereof) will cease to be entitled to any benefits or security under the Indenture or to be deemed Outstanding; and the Owners of such Series 2019 Bonds (or portions thereof) will have no rights in respect thereof except to receive payment of the Redemption Price thereof. Series 2019 Bonds and portions of Series 2019 Bonds for which irrevocable instructions to pay on one or more specified dates or to call for redemption at a redemption date shall have been given to the Trustee in form satisfactory to it will not thereafter be deemed to be Outstanding under the Indenture and will cease to be entitled to the security of or any rights under the Indenture, other than rights to receive payment of the Redemption Price thereof, to be given notice of redemption in the manner provided in the Indenture and described herein, and, to the extent hereinafter described, to receive Series 2019 Bonds for any unredeemed portions of Series 2019 Bonds, if cash and/or Defeasance Obligations

sufficient to pay the Redemption Price of such Series 2019 Bonds (or portions thereof) are held by the Trustee in trust for the Owners of such Series 2019 Bonds.

Redemption of a Portion of a Series 2019 Bond. No redemption of less than all of the Series 2019A Bonds or the Series 2019B Bonds will be permitted to be made unless all Series 2019 Bonds of such Subseries remaining Outstanding after such redemption are of an Authorized Denomination. If a Series 2019 Bond is of an Authorized Denomination larger than the minimum Authorized Denomination, a portion of such Series 2019 Bond may be redeemed, but such Series 2019 Bond will be required to be redeemed in part only in an Authorized Denomination and only if the unredeemed portion thereof is an Authorized Denomination.

If a portion of an Outstanding Series 2019 Bond shall be selected for redemption, the Owner thereof or his, her, or its attorney or legal representative will be required to present and surrender such Series 2019 Bond to the Trustee for payment of the Redemption Price of such Series 2019 Bond, and the Authority will cause to be executed and the Trustee will authenticate and deliver to or upon the order of such Owner or his, her, or its legal representative, without charge therefor, for the unredeemed portion of the principal amount of the Series 2019 Bond so surrendered, a Series 2019 Bond or Series 2019 Bonds of the same Subseries and maturity and of any Authorized Denominations; provided, however, that if the Owner is a Securities Depository Nominee, the Securities Depository, in its discretion, will either be permitted to surrender such Series 2019 Bond to the Trustee and request that the Authority cause to be executed and the Trustee authenticate and deliver a new Series 2019 Bond for the unredeemed portion of the principal amount of the Series 2019 Bond so surrendered or be required to make an appropriate notation on such Series 2019 Bond indicating the dates and amounts of such reduction in principal.

In all instances where the Trustee is directed by the terms of the Indenture to redeem Series 2019 Bonds from moneys deposited into the Redemption Fund, the Trustee shall redeem the maximum number of Series 2019 Bonds that may be redeemed in accordance with the applicable provisions hereof, and any excess moneys will remain in the Redemption Fund.

THE AUTHORITY

In early 2010, both houses of the Wisconsin Legislature passed 2009 Wisconsin Act 205 (“Act 205”) which was signed into law by the Governor of the State of Wisconsin on April 21, 2010. Act 205 added Section 66.0304 to the Wisconsin Statutes (the “Statute”) authorizing two or more political subdivisions to create a commission to issue bonds under the Statute. Before an agreement for the creation of such a commission could take effect, Act 205 required that such agreement be submitted to the Attorney General of the State of Wisconsin to determine whether the agreement is in proper form and compatible with the laws of the State of Wisconsin. The Authority was formed upon execution of a Joint Exercise of Powers Agreement Relating to the Public Finance Authority dated as of June 30, 2010, as amended by an Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated September 28, 2010 (as so amended and as may be further amended from time to time, the “Joint Exercise Agreement”), among Adams County, Wisconsin, Bayfield County, Wisconsin, Marathon County, Wisconsin, Waupaca County, Wisconsin and the City of Lancaster, Wisconsin (each a “Member” and, collectively, the “Members,” which term shall also include any political subdivision designated in the future as a “Member” of the Authority pursuant to the Joint Exercise Agreement). The Joint Exercise Agreement was approved by the Attorney General of the State of Wisconsin on September 30, 2010. The Statute also provides that only one commission may be formed thereunder.

Pursuant to the Statute, the Authority is a unit of government and a body corporate and politic separate and distinct from, and independent of, the State of Wisconsin and the Members. The Authority was established by local governments, primarily for local governments, for the public purpose of providing local

governments a means to efficiently and reliably finance projects that benefit local governments, nonprofit organizations, and other eligible private borrowers in the State of Wisconsin and throughout the country.

POWERS

Under the Statute, the Authority has all of the powers necessary or convenient to any of the purposes of Act 205, including the power to issue bonds, notes or other obligations or refunding obligations to finance or refinance a project, make loans to, lease property from or to, and enter into agreements with a participant or other entity in connection with financing a project. The proceeds of bonds issued by the Authority may be used for a project in the State of Wisconsin or any other state or territory of the United States, or outside the United States if a participating borrower is incorporated and maintains its principal place of business in the United States or its territories. The Statute defines “project” as any capital improvement, purchase of receivables, property, assets, commodities, bonds or other revenue streams or related assets, working capital program, or liability or other insurance program, located within or outside of the State of Wisconsin.

GOVERNING BODY

The Joint Exercise Agreement provides for a Board of Directors of the Authority (the “Board”) consisting of seven directors (each a “Director” and collectively, the “Directors”), a majority of whom are required to be public officials or current or former employees of a political subdivision located in the State of Wisconsin. The Directors serve staggered three-year terms. The Directors are selected by majority vote of the Board based upon nomination from the organization that nominated the predecessor Director. Four Directors are nominated by the Wisconsin Counties Association, and one Director is nominated from each of the National League of Cities, the National Association of Counties and the League of Wisconsin Municipalities (collectively, the “Sponsors” and each a “Sponsor”). Each of the nominating organizations may also nominate an alternate Director for each Director it nominates to serve on the Board in the place of and in the absence or disability of a Director. Directors and alternate Directors may be removed and replaced at any time by the Board upon recommendation of the Sponsor that nominated such Director.

The Directors as of the date of this Official Statement are identified in the table below. There is currently one vacant Board seat (representing the nominee of the National League of Cities) and one Alternate Director (nominated by the Wisconsin Counties Association).

CURRENT TERM EXPIRES NAME TITLE (MAY 31) POSITION William Kacvinsky Chair 2021 Former Board Chair – Bayfield County, Wisconsin Jerome Wehrle Vice Chair 2021 Former Mayor – City of Lancaster, Wisconsin Heidi Dombrowski Treasurer 2019 Finance Director – Waupaca County, Wisconsin Allen Buechel Secretary 2019 County Executive – Fond du Lac County, Wisconsin Del Twidt Director 2019 Former Board Chair – Buffalo County, Wisconsin Michael Gillespie Director 2020 Former Chair – Madison County, Alabama Board of Commissioners John West Alternate 2019 Board Chair – Adams County, Wisconsin Director** ______** Mr. West is an alternate for Directors Buechel, Dombrowski and Twidt.

The Authority has no employees and contracts with a full-service program management firm, GPM Municipal Advisors, LLC, to manage the day-to-day operations of the Authority including, but not limited to,

staff and administrative support and ongoing compliance matters. All of the services provided by GPM Municipal Advisors, LLC are subject to review and approval by the Board.

RESOLUTION; BOARD APPROVAL

On January 23, 2019, the Board adopted the Resolution approving the issuance of the Series 2019 Bonds.

SPECIAL LIMITED OBLIGATIONS

THE SERIES 2019 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF THE AUTHORITY, ANY MEMBER, ANY SPONSOR, ANY AUTHORITY INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2019 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2019 BONDS ARE NOT A DEBT OF THE STATE OF WISCONSIN OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2019 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE SERIES 2019 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OF WISCONSIN OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2019 BONDS, NOR THE FAITH AND CREDIT OF THE AUTHORITY, ANY SPONSOR OR ANY AUTHORITY INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2019 BONDS OR ANY COSTS INCIDENTAL THERETO. THE AUTHORITY HAS NO TAXING POWER.

OTHER OBLIGATIONS

The Authority has issued, sold and delivered in the past, and expects to issue, sell and deliver in the future, obligations other than the Series 2019 Bonds, which other obligations are and will be secured by instruments separate and apart from the Indenture and the Series 2019 Bonds. The holders of such other obligations of the Authority will have no claim on the security for the Series 2019 Bonds, and the owners of the Series 2019 Bonds will have no claim on the security for such other obligations issued by the Authority.

LIMITED INVOLVEMENT

The Authority has not participated in the preparation of or reviewed any appraisal for the Series 2019 Project or any feasibility study or other financial analysis of the Series 2019 Project and has not undertaken to review or approve expenditures for the Series 2019 Project, to supervise the construction of the Series 2019 Project, or to review any financial statements of the Borrower.

The Authority has not participated in the preparation of or reviewed this Official Statement and is not responsible for any information contained herein, except for the information in this section “THE AUTHORITY” and under the caption “SHORT STATEMENT – THE AUTHORITY” and “LITIGATION – THE AUTHORITY” herein as such information applies to the Authority.

THE UNIVERSITY HOUSING MASTER PLAN

Overview. The University is currently undertaking the first of a three-phase master plan that will ultimately replace 1,797 beds of existing student housing with 2,100 new beds over three and a half years (the “Master Plan”). The following is a summary of the full phasing plan of the University’s housing Master Plan, including demolition, renovation and construction:

NUMBER OF PHASE I PHASE 2 PHASE 3 HOUSING PHASING PLAN BEDS FALL 2019 FALL 2020 FALL 2021 FALL 2022 Existing On-Campus Housing Justice Hall 312 312 Demo East Hall 362 362 Demo Bowie Hall 280 280 280 Demo Eggers Hall 280 280 280 Demo Gardner Hall 281 281 281 281 Demo Coltrane Hall 282 282 282 282 Demo Existing Residence Hall Totals 1,797 1,797 1,123 563 0 New Construction Building 100 - Phase 1 590 590 590 590 Building 200 - Phase 1 (General Revenue Bonds) 322 322 322 322 Building 300 - Phase 2 505 505 505 Building 400 - Phase 3 683 683 New Residence Hall Totals 2,100 0 912 1,417 2,100 Total Bed Count 1,797 2,035 1,980 2,100

In addition, below is an associated parking phasing plan:

EXISTING NEW FALL SPRING FALL SPRING FALL SPRING FALL FALL PARKING PHASING PLAN SPACES SPACES 2018 2019 2019 2020 2020 2021 2021 2022

Existing West Project Area Bowie/Eggers Lot 54 25 25 54 6 54 54 Justice Hall Lot 77 77 77 77 77 36 Gardner/Coltrane Lot 8 8 8 8 8 8 8 8 Stadium Lot 516 482 249 5 Existing Parking Total 655 592 359 144 91 98 62 8 0 New Parking Parking Facility 477 477 477 477 477 477 477 Building 200 / 300 Linear Lot 80 80 80 New Bowie / Eggers Lot 150 150 150 New Coltrane / Gardner Lot 171 171 Proposed Parking Total 878 0 0 477 477 477 477 707 878 Total Parking Count 592 359 621 568 575 539 715 878

Phase 1. Phase 1 of the Master Plan includes construction of two student housing facilities, now known as Building 100 and Building 200 and the Parking Facility. The Parking Facility is expected to be made available in August of 2019. Building 100 and Building are expected to be made available in the Fall of 2020. The housing facilities will be located on an approximately 3.4 acre site along an existing pedestrian walkway leading from the academic core of campus and, though modern residence halls, will complement the existing architectural style of the University’s campus. The brick buildings will range from 4-6 stories, will comprise approximately 243,000 square feet (156,000 in Building 100 and 87,000 in Building 200) and will provide a mix of suite and full apartment units and single and double occupancy bedroom options. All units will be fully furnished and have high-speed Wi-Fi throughout the community. Each student will have his or her own twin-size bed, desk, desk chair and dresser. The apartment units will have fully appointed

kitchens with full-sized appliances, including a refrigerator, stove/range, microwave and sink. The buildings will house lounges and other common areas as well as multiple study rooms.

Phases 2 and 3. Phase 2 of the Master Plan includes the construction of 505 student housing beds in what is currently known as Building 300, approximately 230 (Building 200/300 Linear Lot and new Bowie/Eggers Lot) surface parking spaces and related demolition and infrastructure construction. These projects are expected to be completed and available as of Fall of 2021. Phase 3 includes the construction of 683 student housing beds in what is currently known as Building 400, approximately 171 surface parking spaces (new Coltrane/Gardner Lot) and related demolition and infrastructure construction. Phase 2 projects are expected to be completed and available as of Fall of 2021 and Phase 3 projects are expected to be completed and available as of Fall of 2022. The University currently expects to finance Phases 2 and 3 with Additional Bonds issued under the Indenture during calendar years 2020 and 2021. At that time, it is expected that the Borrower and the University will amend the Ground Lease to add the real property on which Phases 2 and 3 will be located.

Unit Mix and Rental Rates. The anticipated mix of units and rental rates for each unit for all three phases, which include all utilities, are below.

PHASE 1 - BUILDING 100 2020-2021 RENT/BED # OF ACADEMIC UNIT TYPE UNITS # OF BEDS SEMESTER YEAR RA Suite 14 14 $2,440 $4,880 1 BR/1 BA Single 15 15 $3,153 $6,306 2 BR/1 BA Single 13 26 $3,153 $6,306 2 BR/1 BA Double 121 484 $3,153 $6,306 2 BR/2 BA Double Apt 12 48 $3,279 $6,558 Grad Assistant Unit 1 1 N/A N/A Staff Apartments 1 2 N/A N/A Subtotal 177 590

PHASE 1 - BUILDING 200 2020-2021 RENT/BED # OF ACADEMIC UNIT TYPE UNITS # OF BEDS SEMESTER YEAR RA Suite 9 9 $2,440 $4,880 1 BR/1 BA Single 9 9 $3,153 $6,306 2 BR/1 BA Single 8 16 $3,153 $6,306 2 BR/1 BA Double 66 264 $3,153 $6,306 2 BR/2 BA Double Apt 5 20 $3,279 $6,558 Staff Apartments 2 4 N/A N/A Subtotal 99 322 Total Phase 1 276 912

PHASE 2 - BUILDING 300 2021-2022 RENT/BED # OF ACADEMIC UNIT TYPE UNITS # OF BEDS SEMESTER YEAR RA Suite 12 12 $2,513 $5,026 2 BR/1 BA Double 116 464 $3,248 $6,495 2 BR/2 BA Double Apt 6 24 $3,337 $6,755 Grad Assistant Unit 1 1 N/A N/A 2 BR/2 BA Staff Apartments 2 4 N/A N/A Subtotal 137 505 Total Phase 2 137 505

PHASE 3 - BUILDING 400 2022-2023 RENT/BED # OF ACADEMIC UNIT TYPE UNITS # OF BEDS SEMESTER YEAR RA Suite 18 18 $2,589 $5,177 2 BR/1 BA Single 15 30 $3,345 $6,690 2 BR/1 BA Double 125 500 $3,345 $6,690 2 BR/2 BA Double Apt 33 132 $3,479 $6,957 Grad Assistant Unit 1 1 N/A N/A 2 BR/2 BA Staff Apartments 1 2 N/A N/A Subtotal 193 683 Total Phase 3 193 683 Grand Total – All Phases 606 2,100

THE SERIES 2019 PROJECT

The Series 2019 Project is part of Phase 1 of the University Master Plan, and includes Building 100 and the Parking Facility. The Parking Facility, which is already underway, and Building 200 will be initially funded with construction loans made to the Borrower; the Series 2019 Bonds will refinance the Parking Facility construction loan and fund construction of Building 100. Building 200 is being financed with a separate construction loan; upon completion, it will be acquired by the University using proceeds of outstanding General Revenue Bonds and other University funds. The Series 2019 Project does not include Building 200.

In addition to Building 100 and the Parking Facility, the Series 2019 Project also includes site development associated with Building 100 and the Parking Facility and off-site infrastructure improvements, including, but not limited to, grading, street and sidewalk improvements and utility infrastructure (collectively, the “Offsite Improvements”). While the Leasehold Deed of Trust grants a first lien in and to the Borrower’s leasehold interest in the site of Building 100 and the Parking Facility (collectively, the “Property,” and together with Building 100 and the Parking Facility, the “Premises”), it does not include a lien on the Offsite Improvements.

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ESTIMATED SOURCES AND USES OF FUNDS

The schedule below contains the estimated sources and uses of funds resulting from the sale of the Series 2019 Bonds:

SERIES 2019A SERIES 2019B BONDS BONDS TOTAL

SOURCES: The Series 2019 Bonds $60,760,000 $925,000 $61,685,000 Net Original Issue Premium 3,827,482 3,827,482

TOTAL $64,587,482 $925,000 $65,512,482

USES: Deposit to the Series 2019 Construction Fund $55,346,641 $ 55,346,641 Deposit to the Capitalized Interest Account1 5,452,694 $ 66,306 5,518,999 Deposit to Debt Service Reserve Fund 1,611,639 403,177 2,014,817 Costs of Issuance2 2,176,508 455,517 2,632,024 $64,587,482 $925,000 $65,512,482 TOTAL ______1This amount, constituting interest on the Series 2019 Bonds through February 1, 2021 (which is approximately six months following the expected delivery of the Series 2019 Project), will be deposited to the Capitalized Interest Account of the Series 2019 Bond Fund and disbursed to pay the initial interest to accrue on the Series 2019 Bonds. 2Includes Underwriter’s discount, legal fees, accounting fees, Authority and Borrower fees, premiums for the Series 2019 Bond Insurance Policy and the Series 2019A Reserve Policy and other costs of issuance.

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ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth the principal, including principal payable at maturity and by mandatory redemption, and interest payment requirements with respect to the Series 2019 Bonds.

PERIOD SERIES 2019A SERIES 2019A SERIES 2019B SERIES 2019B CAPITALIZED SERIES 2019 NET ENDING PRINCIPAL INTEREST PRINCIPAL INTEREST INTEREST DEBT SERVICE 7/1/2019 $1,088,563 $12,849 $1,101,411 7/1/2020 2,860,456 33,763 2,894,219 7/1/2021 2,860,456 33,763 1,689,374 $1,204,844 7/1/2022 2,860,456 $290,000 33,763 3,184,219 7/1/2023 2,860,456 380,000 23,178 3,263,634 7/1/2024 $ 370,000 2,860,456 255,000 9,308 3,494,764 7/1/2025 730,000 2,845,656 3,575,656 7/1/2026 810,000 2,816,456 3,626,456 7/1/2027 840,000 2,784,056 3,624,056 7/1/2028 875,000 2,750,456 3,625,456 7/1/2029 910,000 2,715,456 3,625,456 7/1/2030 945,000 2,679,056 3,624,056 7/1/2031 990,000 2,631,806 3,621,806 7/1/2032 1,040,000 2,582,306 3,622,306 7/1/2033 1,095,000 2,530,306 3,625,306 7/1/2034 1,150,000 2,475,556 3,625,556 7/1/2035 1,205,000 2,418,056 3,623,056 7/1/2036 1,265,000 2,357,806 3,622,806 7/1/2037 1,330,000 2,294,556 3,624,556 7/1/2038 1,380,000 2,241,356 3,621,356 7/1/2039 1,440,000 2,186,156 3,626,156 7/1/2040 1,495,000 2,128,556 3,623,556 7/1/2041 1,570,000 2,053,806 3,623,806 7/1/2042 1,650,000 1,975,306 3,625,306 7/1/2043 1,730,000 1,892,806 3,622,806 7/1/2044 1,820,000 1,806,306 3,626,306 7/1/2045 1,910,000 1,715,306 3,625,306 7/1/2046 1,985,000 1,636,519 3,621,519 7/1/2047 2,070,000 1,554,638 3,624,638 7/1/2048 2,155,000 1,469,250 3,624,250 7/1/2049 2,245,000 1,380,356 3,625,356 7/1/2050 2,335,000 1,287,750 3,622,750 7/1/2051 2,455,000 1,171,000 3,626,000 7/1/2052 2,575,000 1,048,250 3,623,250 7/1/2053 2,705,000 919,500 3,624,500 7/1/2054 2,840,000 784,250 3,624,250 7/1/2055 2,980,000 642,250 3,622,250 7/1/2056 3,130,000 493,250 3,623,250 7/1/2057 3,285,000 336,750 3,621,750 7/1/2058 3,450,000 172,500 3,622,500 TOTAL $60,760,000 $78,168,238 $925,000 $146,621 $5,685,004 $134,314,855

______Note: Totals may not foot due to rounding.

THE BORROWER

GENERAL

Beyond Boone LLC is a limited liability company, the sole member of which is Beyond Owners Group, Inc. (“Beyond Owners Group”), a Pennsylvania non-profit corporation. The Borrower was organized in July, 2018 under the laws of the State of Delaware for the purpose of assisting the University by providing student housing and related facilities exclusively for the benefit of the University and its students. The Borrower is not expected to have any assets other than the Series 2019 Project and any assets associated with additional phases of housing as permitted by the Indenture.

BEYOND OWNERS GROUP

Beyond Owners Group is a nonprofit corporation formed in 2016 under the laws of the Commonwealth of Pennsylvania. Beyond Owners Group is also an organization that is exempt from federal income tax pursuant to §501(c)(3) of the Internal Revenue Code of 1986, as amended. It was organized and is operated exclusively for charitable and educational purposes including the purpose of assisting colleges and universities in providing housing for their enrolled students and otherwise assisting them in furtherance of their educational missions. Neither Beyond Owners Group nor any affiliate or subsidiary of Beyond Owners Group other than the Borrower will have any obligation with respect to the Series 2019 Bonds or under any of the Bond Documents.

Beyond Owners Group is governed by a Board of Directors elected by its members. The following individuals constitute the Board of Directors and officers of Beyond Owners Group:

NAME BUSINESS AFFILIATION TERM EXPIRES

Geoffrey Beers Director and President of Beyond Owners Group, CEO of April 24, 2020 Student Services, Inc. and CEO of Student Lodging, Inc.

Robert Sempsey Director, Vice President and Secretary of Beyond Owners April 24, 2020 Group, Chief Business Officer of SSI and SLI

Douglas Schultz Director and Treasurer of Beyond Owners Group, CFO of April 24, 2020 United Fiber and Data

Minor (Will) Redmond Director of Beyond Owners Group, Retired April 24, 2020

James McCollum Director of Beyond Owners Group, Retired April 24, 2020

The business and affairs of the Borrower is conducted by Beyond Owners Group, as the sole member of the Borrower. Beyond Owners Group has appointed two officers of the Borrower to perform all management and operations of the Borrower. The officers of the Borrower who have been appointed are Geoffrey Beers, President, and Robert Sempsey, Vice President and Secretary. The Borrower’s liabilities are limited to its interest in the Series 2019 Project.

under or independent hereof, will be had against any incorporator, director, member, or officer, as such, past, present, or future of the Borrower or Beyond Owners Group, or any incorporator, director, member, or officer of any successor entity, as such, either directly or through the Borrower or any successor entity, or otherwise, for the payment for or to the Borrower or any receiver thereof, of any sum that may be due and unpaid by the Borrower under the Loan Agreement, any of the Bond Documents, or any other documents delivered in connection with the issuance of the Series 2019 Bonds.

THE GROUND LEASE AND RELATED AGREEMENTS

THE GROUND LEASE

General. Pursuant to the Ground Lease, the State of North Carolina by and through the University, under authority delegated by the Board of Governors of the University of North Carolina, as the Ground Lessor, is leasing the Property to the Borrower for a term of 50 years, subject to certain termination rights provided therein.

Eligible Residents. Pursuant to the Ground Lease, upon completion of construction of the Student Housing Facility, the Borrower shall operate, or cause to be operated, all such improvements as a student housing facility to serve Eligible Residents (except certain classroom, office and common space available to all students, faculty and staff of the University). “Eligible Residents” means any person (i) who is a student enrolled in classes at the University, (ii) who is attending a program presented and conducted by the University, or another organization recognized as exempt under § 501(c)(3) or Section 115(1) of the Internal Revenue Code on the Campus (as defined in the Ground Lease), whose presence on the Campus is deemed desirable by the Lessor to the effective provision of the University’s programs and services at the Campus, (iii) who is attending summer conferences, orientation or other programs on the Campus and sponsored by the Lessor or a 501(c)(3) organization whose presence on the Campus furthers the effective provision of the Lessor’s educational programs and services at the Campus, (iv) who is a member of the faculty or staff of the University, whose presence on the Campus is deemed desirable by the Lessor to the effective provision of the University’s educational programs and services at the Campus, or a member of the household of such person that is either the spouse or domestic partner or a dependent of such person or such spouse or domestic partner, or (v) any other invitee authorized by the University.

Rent. The Borrower covenants and agrees to pay rent to the University, as lessor, subject to the terms of the Indenture, throughout the term of the Ground Lease in an amount equal to Net Available Cash Flow. Net Available Cash Flow will equal the amount transferred from time to time to the Surplus Fund created under the Indenture less amounts needed to pay the annual fee payable to the Borrower (described below) less any amounts required or permitted to be withdrawn or transferred therefrom in accordance with the provisions of the Indenture. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS – THE INDENTURE – Revenue Fund” and “- Surplus Fund” in Appendix D hereto. The University is required to deposit such funds to the Millennial Campus trust fund required by statute for projects on the University’s designated “millennial campus” sites.

Annual Fee of Borrower. In consideration for entering into the Ground Lease, the Lessor agrees to pay or cause the Borrower to be paid the following amounts:

(i) an acquisition fee equal to 25 basis points of the principal amount of the Series 2019 Bonds or any Additional Bonds issued in connection with the financing of the Project, which will be payable out of the proceeds of the Series 2019B Bonds or any Additional Bonds; and

(ii) for each Annual Period, a fee equal to three quarters of one percent of the sum of the gross operating revenues derived by the Borrower from the ownership or operation of the Student Housing Facility, which payment shall be paid in twelve monthly installments out of the Pledged

Revenues of the Student Housing Facility based on the Pledged Revenues actually received for each month during an Annual Period in accordance with the terms of the Indenture and the Operating Agreement.

Construction of Improvements. Pursuant to the Ground Lease, and subject to certain exceptions set forth in the Ground Lease, the University has reserved the right to approve all matters related to the construction of the Student Housing Facility and the Parking Facility, including the approval of all the documents relating to the development, design and construction of the Series 2019 Project and change orders other than for immaterial modifications. In addition, the Borrower has agreed to coordinate the construction of the Series 2019 Project with the appropriate departments of the University.

The Borrower is required to provide the University reasonably prompt notice of the occurrence of a Permitted Delay (as defined in the Ground Lease) that will have an adverse effect on the project schedule. The Lessor and Borrower shall mutually agree with the Developer with respect to the occurrence of the Permitted Delay and the number of days that the project schedule shall be adjusted, if any. The Borrower is required to cause the Developer to diligently accomplish performance and completion of all punch list work and achieve final completion of each Improvement in accordance with the timeframes set forth in the Development Agreement. If the Borrower has not achieved Substantial Completion (as defined in the Ground Lease) of the Series 2019 Project on or before the Substantial Completion Deadline (as defined in the Ground Lease) therefor and the Trustee shall not elect to complete construction of such Improvement or such portion of the Series 2019 Project pursuant to the terms of the Bond Documents, then the Lessor may, in addition to its other rights and remedies (i) perform or procure performance of the work to complete construction of the Series 2019 Project or any Improvement as the Lessor determines in its absolute and sole discretion; and (ii) execute on any performance bond or other security.

The Borrower shall provide or cause to be provided to the University commercial payment and performance bonds for the construction of the Series 2019 Project and any Additional Improvements in accordance with the terms of the Development Agreement and the Loan Agreement. Except as otherwise permitted in the Ground Lease, the University shall not enforce its rights as an obligee under any performance bond without the prior written consent of the Bond Insurer.

Taxes, Maintenance and Insurance. Pursuant to the Ground Lease, the Borrower is obligated to maintain the Student Housing Facility, as well as pay all taxes and insurance. In addition, the Borrower is obligated to apply for property tax exemption once the Series 2019 Project is complete.

Advisory Committee. The Borrower and the University have agreed in the Ground Lease to utilize an Advisory Committee comprised of representatives of the Borrower and the University for making certain high level recommendations regarding operating and management policies relating to the Series 2019 Project, including the review and approval of the Annual Budget and the Annual Plan. The Advisory Committee shall have certain approval rights relating to the management of the Series 2019 Project as set forth in the Asset Management Agreement and the Operating Agreement.

Annual Budget. The University shall provide, in consultation with the Borrower, a line-item operation and capital budget for the Project for each Annual Period (collectively, the “Annual Budgets” and each an “Annual Budget”) which shows, on a month-by-month basis, in reasonable detail, each line item of anticipated income and expense (on an accrual basis) broken out to include both Expenses and Subordinated Expenses, a proposed annual plan (the “Annual Plan”) which includes (among other things): (i) an update to the ten year capital plan, which shall be provided by the Borrower, that will consist of the overall plan for the repair, management, operation, improvement and maintenance of the Project including, without limitation, any recommendations made in the most recent Periodic Project Assessment for the Student Housing Facility and as otherwise approved by the Borrower and the University, as provided in the Bond Documents, (ii) an explanation of anticipated changes to resident charges, payroll rates and positions, non-wage cost increases,

and all other factors differing from the current year, (iii) any proposed changes in operational programs, policies and procedures and the emergency response plans; and (iv) such other information, including a description of plans, contracts, agreements, governmental approvals and other matters, as may be necessary or reasonable in order to inform the Advisory Committee of all matters relevant to the ownership, operation and management of the Student Housing Facility or any portion thereof, and to otherwise allow the Advisory Committee to make an informed decision with respect to the approval of the Annual Budget and Annual Plan, and all information required under the Bond Documents. The approval of the Annual Budget shall require the unanimous vote of the Advisory Committee.

For the Annual Period commencing July 1, 2020 through June 30, 2021, the Borrower shall cause the Advisory Committee to submit a budget no later than January 15, 2020. Commencing with the Annual Period commencing July 1, 2021 and for each Annual Period thereafter, the Advisory Committee shall submit to the Lessor and the Borrower for approval a proposed Annual Budget not later than the 15th day of the prior January. The Lessor and the Borrower shall each have up until the 15th day of February prior to the commencement of such Annual Period to give the other party notice of its approval of the Annual Budget as submitted or of its disapproval of one or more of the matters contained therein. If the Lessor or the Borrower shall fail to give notice of approval or disapproval in a timely manner, then the Annual Budget as submitted shall be deemed approved by such party that fails to give notice. In the event that the Lessor gives notice of its disapproval, the Borrower will endeavor to work with the Lessor to promptly, in good faith, develop an Annual Budget on which both parties agree. In the event that the Borrower and the Lessor fail to reach agreement not later than March 1st, the Annual Budget for the then current Annual Period shall be implemented for the next Annual Period. Dates of delivery of preliminary and final Annual Budgets may be adjusted from time to time with the consent of Borrower and Lessor without amendment to the Ground Lease.

From time to time during or in respect to an Annual Period, the Borrower shall have the right to modify the Annual Budget with input of the Advisory Committee, which amendment shall be subject to the Lessor’s consent provided that such consent shall not be unreasonably withheld, delayed or conditioned, if: (i) the amendment is to reflect additional Pledged Revenues or the receipt of insurance or condemnation proceeds; (ii) the amendment shall be for an amount that does not increase total amount of Expenses, when added to all other changes to budget, either the original amount or an increased amount approved by the Lessor and then in effect by more than ten percent (10%) (provided, that, in no event, shall any Subordinate Expenses be re-characterized as an Expense during a current Annual Period); or (iii) the amendment shall be necessary to preserve life or property or comply with law. Any amendment to the Annual Budget must otherwise comply with the requirements of the Loan Agreement. An Annual Budget for an Annual Period, as so amended, shall, after such amendment, be the Annual Budget for such Annual Period.

The Student Housing Facility shall be operated and maintained in accordance with the Annual Budget and Annual Plan. The University, as Manager, shall meet no less frequently then monthly with the Advisory Committee to review the day to day operations of the Student Housing Facility and compare actual operating performance versus the Annual Budget. The Advisory Committee may make recommendations to the University, as Manager, regarding adjustment to operations and management of the Student Housing Facility as provided in the Operating Agreement.

The Lessor acknowledges that there may be certain periods (e.g., the summer months) when the Pledged Revenues may be inadequate to pay all of the Expenses (collectively, the “Shortfall Periods” and each, a “Shortfall Period”) and agrees that provision should be made for the funding of any such liquidity shortfalls (collectively, the “Shortfalls” and each, a “Shortfall”) during the periods when the Pledged Revenues are more than adequate to pay all of the Expenses (collectively, the “Surplus Periods” and each, a “Surplus Period”). The Lessor therefore authorizes the Borrower to make provision for such Shortfalls by arranging to have amounts deposited in the Operating Account during Surplus Periods to be in excess of that which is required to pay Expenses during such Surplus Periods with such excesses to be in the amounts of

the anticipated Shortfalls. The Lessor also acknowledges that the funding for a Shortfall Period in one Annual Period may be made during a Surplus Period occurring in the immediately preceding Annual Period. The Borrower agrees that any such funding for a Shortfall Period shall be clearly and completely identified in the Annual Budget submitted to and approved by the Lessor.

Utilities and Services. The Lessor shall provide to Borrower with respect to the Student Housing Facility all utilities and services similar to the services provided to student housing facilities owned by the University, including water, electricity, telecommunications, natural gas, sewage, garbage collection services, trash disposal, recycling, landscape maintenance and vermin extermination (the “University Utility Services”), and the University shall be entitled to reimbursement of the actual cost of such University Utility Services, as an Expense or a Subordinated Expense, as applicable, in accordance with the provision of the Annual Budget and the Indenture, as determined by one or more submeters installed within the University’s utility infrastructure. Upon at least 180 days’ notice, the University may elect to discontinue providing any one or more of the University Utility Services, whereupon the Borrower shall make application for, obtain and pay for and be solely responsible for all utilities required for the Student Housing Facility and not so provided by the University (collectively, “Lessee Utility Services”) and required, used, or consumed on the Premises with respect to the Student Housing Facility, and any such change shall not require an amendment to the Ground Lease. In the event that separate submeters are installed to measure Borrower’s usage, consumption or demand on the Premises, the University will invoice Borrower for usage by Borrower according to University’s submeters at the actual costs paid or incurred by the University for such services to the applicable public utility company. Any amounts the University invoices to the Borrower will be paid as an Expense or a Subordinated Expense and will be paid in accordance with the Indenture. The Lessor shall initially provide all utilities required, used or consumed with respect to the Parking Facility. During the term of the Parking Facility Lease, pursuant to the terms of the Paring Facility Lease, the University shall also pay for water, electricity, telecommunications, natural gas, sewage, garbage collection services, trash disposal, landscape maintenance and vermin extermination required, used, or consumed on the Premises with respect to the Parking Facility (the “Parking Facility Utilities”). In the event the Parking Facility Lease has expired and not been renewed the Lessor shall continue to provide Parking Facility Utilities and any amounts the University invoices to the Borrower for Parking Facility Utilities shall be paid from amounts on deposit in the Secondary Reserve Fund as Subordinated Expenses as provided by the Indenture.

The University Utility Services, the Parking Facility Utilities and Lessee Utility Services will be provided in part through the utility lines to be constructed as part of the Offsite Improvements and through other utility infrastructure located on the Campus but outside the Property, and upon completion of each building of the Student Housing Facility and of the Parking Facility, including the utility lines included in the Offsite Improvements, as required by the Plans and Specifications, the Lessor shall grant such easements and rights to the utilities providing the University Utility Services, Parking Facility Utilities and Lessee Utility Services as are necessary to allow the operation, maintenance and repair of such utility infrastructure in a manner sufficient to provide the University Utility Services, the Parking Facility Utilities and Lessee Utility Services in a consistent, uninterrupted manner and in compliance with applicable laws or, alternatively, shall itself keep such infrastructure in good and operable condition.

Indemnity of Lessor. Only to the extent of the Borrower’s rights to and ownership interest in the Student Housing Facility and the Parking Facility or required insurance coverage, in the Ground Lease, the Borrower releases and agrees to indemnify and hold harmless the Lessor and all of its trustees, officers, employees, directors, agents, and consultants from and against any and all claims, demands, liabilities, losses, costs, or expenses for any loss including but not limited to bodily injury (including death), personal injury, property damage, expenses, and reasonable attorneys' fees, caused by, growing out of, or otherwise happening in connection with the Ground Lease other than with respect to the Lessor’s obligations with respect to the Parking Facility during the term of the Parking Facility Lease due to any negligent act or omission on the part of the Borrower, its agents, employees, or others working at the direction of the Borrower or on its behalf, or due to the application or violation of any pertinent federal, State, or local law,

rule, or regulation but shall not include any liability for any criminal, tortious, or intentional acts of the indemnitees.

Insurance. The Ground Lease requires that the Borrower maintain insurance at required levels for, among other things, property and casualty, business interruption, liability (including automobile insurance) and worker’s compensation.

Lessor Access to Premises. The University and its authorized representatives, agents, employees, and attorneys are permitted to enter the Parking Facility and the Student Housing Facility at reasonable times and hours, subject to the rights of tenants in possession, if any, to inspect the Property in order to determine whether the Borrower is complying with its undertakings, duties, and obligations under the Ground Lease. The University may make such necessary repairs, additions, improvements, changes, or alterations to the Property, the Parking Facility and the Student Housing Facility as the University may elect to make in accordance with the terms and provisions of the Ground Lease and to exhibit the same to prospective purchasers, operators, mortgagees, or tenants of the Property and Student Housing Facility.

Option to Purchase. Upon compliance with the requirements of the Ground Lease, and commencing on the tenth anniversary of the Commencement Date, the Lessor has the option to purchase the Borrower’s right, title and interest in and to all, or a portion of, the Student Housing Facility and the Parking Facility or the Parking Facility (subject to the Lessor obtaining any required approvals by the State to acquire such facility or facilities) at a purchase price equal to the principal balance then outstanding of all sums secured by any leasehold mortgage, which identifies which portion of the Series 2019 Project, if less than all, is being acquired by Lessor, then in effect, plus any premium payable on such indebtedness, plus all interest accrued or to accrue on such indebtedness through the date of payment of such indebtedness plus any other charges due and payable under the Bond Documents.

Event of Default. The occurrence of any of the following will constitute an event of default on the part of the Borrower under the Ground Lease:

(i) The Borrower shall fail to pay the rent due thereunder at the times specified therein.

(ii) The Borrower shall fail to perform or cause to be performed any term, covenant, condition, or provision hereof, other than as described in clause (i) above, and to correct such failure within 30 days after written notice specifying such is given to the Borrower, the Bond Insurer and the Trustee by the Lessor. In the case of any such failure that cannot with due diligence be corrected within such 30 day period but can be wholly corrected within a period of time not materially detrimental to the rights of the Lessor, it shall not constitute an Event of Default if corrective action is instituted by the Borrower within the applicable period and diligently pursued until the failure shall be corrected.

(iii) The Borrower shall be adjudicated as bankrupt.

(iv) The Borrower shall voluntarily take advantage of any bankruptcy or other debtor relief proceedings under any law providing for the reduction or deferral of rent due under the Ground Lease or shall become subject to any such involuntary proceedings and said involuntary proceedings shall not be dismissed within 90 days after notice from the Lessor to the Borrower to obtain such dismissal.

(v) The Premises or the Borrower’s effects or interests therein shall be levied upon or attached under process against the Borrower, and the same shall not be satisfied or dissolved within ninety (90) days after notice from the Lessor to the Borrower and the Trustee to obtain satisfaction or dissolution thereof.

(vi) Borrower fails to commence (or cause the Developer to commence) full scope construction work at the Premises under the Construction Contract for the Student Housing Facility within 15 days after issuance of a notice to proceed in accordance with the Ground Lease.

(vii) Borrower fails to achieve Substantial Completion of the Student Housing Facility by August 2, 2020 (unless extended pursuant to the Development Agreement), unless Borrower is then diligently prosecuting the construction work to Substantial Completion and provide Alternate housing in accordance with the Ground Lease.

(viii) Abandonment of the construction, operation or repair of any of the Student Housing Facility, the Parking Facility and the Offsite Improvements, as applicable, for ten consecutive days (excluding abandonment as a result of Force Majeure or as a result of actions of the University to close its Campus or restrict access to the Student Housing Facility) and the failure of Borrower to resume construction, operation and/or repair of the Student Housing Facility, the Parking Facility and the Offsite Improvements, as applicable, within five days after notice by Lessor to the Borrower, the Developer, the Trustee and the Bond Insurer, as applicable; provided, however, that no temporary cessation of the operation or repair of the Parking Facility as a result of the termination of the Parking Facility Lease shall constitute an abandonment hereunder.

Remedies. Subject to the provisions described below and the payment or defeasance of the Series 2019 Bonds or any Additional Bonds, upon the occurrence of an Event of Default, the Lessor may pursue one of the following remedies:

(i) Terminate the Ground Lease immediately upon written notice thereof to the Borrower, the Trustee and the Bond Insurer, and thereafter, without legal process, enter upon and take possession and control of the Premises to the complete exclusion of the Borrower. The Lessor may also demand, collect, and retain all rents due from tenants occupying the Student Housing Facility and collect and retain all fees and charges from users of the Parking Facility, and the Lessor may otherwise treat and occupy the Premises as if the Ground Lease had expired of its own limitation. The failure of the Lessor to exercise such rights after one or more Events of Default shall not be a waiver of the rights of the Lessor upon the occurrence of any subsequent Event of Default; or

(ii) As the Borrower's legal representative, without terminating the Ground Lease, re-let the Premises upon obtaining the written consent of the Trustee on the terms set forth in the Ground Lease.

If the Lessor shall elect to terminate the Ground Lease upon the occurrence of an Event of Default, the Trustee shall also have the right to postpone and extend the date of termination as fixed by the provisions of the Ground Lease for a period of not more than twelve months from the expiration of the period specified in subsection (c) hereof, provided that the Trustee shall pay the Rent and other charges required to be paid under the Ground Lease during such period, and shall perform the obligations of the Borrower under the Ground Lease during such period; provided further, that the Trustee shall forthwith take steps necessary to acquire the Borrower’s interest and estate in the Ground Lease by foreclosure of its Leasehold Mortgage, or otherwise, and shall prosecute such action to completion with due diligence. If at the end of the twelve month period, the Trustee shall be actively engaged in steps to acquire or sell the Borrower’s interest in the Ground Lease, the time for the Trustee to comply with the provisions of this subsection shall be extended for such period as shall be reasonably necessary, in the discretion of Lessor to complete these steps with reasonable diligence and continuity.

The Lessor agrees that in the event of any foreclosure under any Leasehold Mortgage, either by judicial proceedings or under power of sale contained therein all right, title and interest encumbered by such

Leasehold Mortgage may, without the consent of the Lessor, be assigned to and vested in the purchaser at such foreclosure sale subject and subordinate, however, to the rights, title and interests of the Lessor; and, notwithstanding that the Lessor's consent to such assignment shall not have been obtained, any such assignee shall be vested by virtue of such assignment with any and all rights of the party whose estate was encumbered by such Leasehold Mortgage as though the Lessor had consented thereto.

In the event of a termination of the Ground Lease by reason of any Event of Default, and subject to the rights therein granted to the Trustee, the Trustee shall have the option, but not the obligation, to enter into a Mortgagee Lease on the terms provided in the Ground Lease.

Notwithstanding anything else contained in the Ground Lease, if an event occurs (other than the expiration of the term of the Ground Lease) that gives the Lessor the right to terminate the Ground Lease and the Trustee does not elect to enter into a Mortgagee Lease, then, as a condition to the Lessor’s right to terminate the Ground Lease, the Lessor and Trustee will cooperate with each other to identify available alternatives that will protect the interests of the Lessor and the Trustee.

The liability of the Borrower under the Ground Lease will be non-recourse, and the Lessor’s sole source of satisfaction of the obligations of the Borrower will be limited to the Borrower’s interest in the Student Housing Facility and the rents, issues and surplus related thereto.

Lessor’s Commitment to Student Housing Facility. The Lessor and the Borrower agree in the Ground Lease that the Student Housing Facility be treated at all times as part of and on an equal basis with the University's on-campus housing stock regularly made available to its students, whether or not the Student Housing Facility is managed by the University. To such end, the Lessor, through the University agrees to:

(i) include the Student Housing Facility in all information and marketing materials regarding student housing that it provides to students and prospective students, including providing information about the Student Housing Facility on the University’s web site, and include the Student Housing Facility in any housing assignment system it holds and otherwise promote the availability of the Student Housing Facility in the same manner as its own student housing facilities;

(ii) to the extent possible, provide to students residing at the Student Housing Facility the same services and access it provides to students in its own housing facilities from time to time, including, without limitation, its current residence life programs, computer network and student transportation system;

(iii) not construct or otherwise sponsor any additional housing facilities for University students on or off campus (“Additional Student Housing”) beyond the replacement of the same number of beds of existing housing facilities owned by the University and the construction of Building 300 and Building 400, unless: (i) the University delivers to the Borrower and the Series 2019 Bond Insurer (x) a certification of the Manager demonstrating (with supporting calculations) that the Student Housing Facility and the Parking Facility have maintained a debt service coverage ratio of at least 1.20 for each of the immediately preceding two (2) Annual Periods, if available, and (y) a written report of an independent consultant projecting (with supporting calculations) that the debt service coverage ratio for the Student Housing Facility and the Parking Facility are not reasonably expected to be less than 1.20 beginning with the date that the Additional Student Housing is expected to commence operations and ending on the final maturity of the Bonds then outstanding (or such shorter period of time as agreed in writing by the Borrower and the Series 2019 Bond Insurer), when taking into account the Additional Student Housing; (ii) the construction of the Additional Student Housing is supported by a demand study from an independent consultant completed not more than three (3) years prior to the projected commencement of construction concluding that sufficient demand exists for the additional number of beds to be constructed so as

not to have a material adverse effect on the Student Housing Facility and the rate covenant with respect to the Bonds; and (iii) no Event of Default exists under the Loan Agreement. The debt service coverage ratio shall be calculated in the same manner as Fixed Charges Coverage Ratio is calculated under the Indenture. The projections and demand study shall be prepared by a nationally recognized consulting firm(s) experienced in student housing for comparably sized or larger institutions of higher education mutually agreed upon by the University, the Borrower and the Series 2019 Bond Insurer;

(iv) not direct or assign students on a priority basis to the University’s existing housing facilities or Additional Student Housing in preference over the Student Housing Facility, except under the University’s practices designed to meet special program needs, such as housing for residential learning communities, athletes or honors program;

(v) maintain and diligently enforce with respect to the Student Housing Facility the University’s then current policies and practices regarding withholding of grades and/or registration in the event of delinquencies in the payment of rent under housing agreements;

(vi) ensure that the Student Housing Facility and the Premises shall be subject, at all times during the term of the Ground Lease, to the jurisdiction of the University’s campus security force;

(vii) in the event the University is not serving as Manager of the Student Housing Facility, the University will (i) implement procedures to assist students in applying for residence at the Student Housing Facility, (ii) assist where possible in the collection of rents, (iii) where appropriate, facilitate the use of financial aid provided to students to pay eligible housing expenses, (iv) permit the Borrower to advertise the Student Housing Facility on the University’s campus and its website and to post reasonably sized advertising literature on bulletin boards in the University’s facilities that are available for public announcements, (v) permit the Borrower to maintain space on the University’s campus at a site determined by the University for a staffed leasing display, and (vi) to the extent permitted by law, provide to the Borrower a mailing list of the University’s students that are seeking housing to the extent such a list is maintained and the Lessor is permitted by law to disclose such information regarding its students to the Borrower; and

(viii) market and lease the Student Housing Facility’s beds, at a cost and on a basis consistent with the University’s existing housing policies and procedures and current and anticipated inventory of beds.

The Borrower agrees in the Ground Lease to provide information regarding the Student Housing Facility appropriate to assist the University in carrying out its undertakings described above and, if the University is not the manager of the Student Housing Facility, provide in any management contract for the Student Housing Facility provisions requiring the manager to implement appropriate procedures to facilitate the University's undertakings described above.

So long as the Series 2019 Bonds are outstanding, the Lessor also agrees that if the Borrower fails to meet the Fixed Charge Coverage Ratio as provided in the Loan Agreement, it will cooperate with the Borrower in selecting an independent consultant and in implementing such consultant’s recommendations regarding the operation and management of the Student Housing Facility or the Parking Facility and Additional Improvements; and will assist the Borrower with its continuing disclosure obligations by providing it with such information about the Lessor or the Student Housing Facility or the Parking Facility that the Borrower may need to comply with any such obligations, including but not limited to demographic and statistical information about its enrollment, on-campus housing and general financial stability, residency

requirements, and the occupancy rates for the Student Housing Facility, and, if the Parking Facility Lease is not in effect, revenues generated by the Parking Facility.

Lessor’s Commitment to Parking Facility. If, at any time during the term of the Ground Lease the Parking Facility Lease is terminated or not renewed in accordance with the terms thereof or otherwise replaced, the Lessor, through the University, shall, at all times during the remaining term thereof or until such earlier date upon which the Lessor has purchased the Parking Facility as permitted thereunder:

The Lessor shall:

(i) operate, maintain, repair and manage the Parking Facility in a manner consistent with the terms of the Parking Facility Lease and as otherwise provided in the Ground Lease;

(ii) ensure that the Parking Facility is subject to the jurisdiction of the Lessor’s campus security force;

(iii) include the Parking Facility in all information regarding on-Campus parking options that it provides to students, faculty and staff of the University and otherwise promote the availability of the Parking Facility in the same manner as its own parking facilities;

(iv) operate the Parking Facility as a revenue producing parking facility and charge such rates, fees and charges for use of the Parking Facility and exercise such skill and diligence as will provide gross revenues sufficient to pay promptly all expenses of operation, maintenance, repair and management of the Parking Facility;

(v) transfer all gross revenues generated from the use of the Parking Facility to the Trustee on a weekly basis and such gross revenues shall constitute Pledged Revenues; and

(vi) not construct or otherwise sponsor any additional parking for University students, faculty or staff on or off campus ("Additional Parking Facilities") beyond the replacement of existing parking spaces (other than as contemplated in connection with the construction of Building 300 and Building 400) or parking spaces required by any building code requirement for new buildings being constructed on or off campus, unless: (i) the Lessor delivers to the Borrower and the Bond Insurer (x) a certification of the Manager demonstrating (with supporting calculations) that the Student Housing Facility and the Parking Facility have maintained a debt service coverage ratio of at least 1.30 for each of the immediately preceding two (2) Annual Periods and (y) a written report of an independent consultant projecting (with supporting calculations) that the debt service coverage ratio for the Student Housing Facility and the Parking Facility are not reasonably expected to be less than 1.30 beginning with the date that the Additional Parking Facilities are expected to commence operations and ending on the final maturity of the Bonds then outstanding (or such shorter period of time as agreed in writing by the Borrower and the Bond Insurer); and (ii) no Event of Default exists under the Bond Documents. The debt service coverage ratio shall be calculated in the same manner as the Fixed Charges Coverage Ratio is calculated under the Trust Indenture. The projections shall be prepared by a nationally recognized consulting firm(s) experienced in student housing facilities for comparably sized or larger student housing facilities mutually agreed upon by the Lessor, the Borrower and the Bond Insurer.

Failure to Provide Student Housing Facility on Schedule. If the Developer fails to receive the certificate of occupancy from the Town of Boone related to the Student Housing Facility by August 2, 2020, then under the Development Agreement the Borrower shall require the Developer to arrange for security, transportation, storage and alternative housing reasonably acceptable to the University for the residents who have contracted to reside in the Student Housing Facility until the applicable unit for such resident reaches

Substantial Completion. Under the Operating Agreement, the University, as manager, shall be required to remit any payments received from Eligible Residents assigned to the Student Housing Facility to the Trustee for deposit to the Revenue Fund under the Indenture.

If temporary housing is required to be provided by the Developer, the Developer shall provide temporary housing of a quality and condition comparable to the student housing facility being constructed within the area designated by the University; provided that the Lessor shall make available to Borrower and Developer any vacant beds in other housing of Lessor for a temporary period. The University, as manager, shall require all Affected Residents to pay the fees under their executed housing license agreements and shall remit the same to the Trustee in the manner required by the Bond Documents. Affected Residents shall have up to five (5) days after the date of substantial completion to move from temporary housing to the Student Housing Facility (the “Moving Holdover Period”).

If the Developer is required to provide temporary housing for Affected Residents as set forth above, the Borrower shall cause the Developer to be responsible for all of the following costs (collectively, the “Temporary Housing Costs”): (i) the actual cost of providing the temporary housing; (ii) the actual cost of reasonable transportation of Affected Residents housed off-campus between the temporary housing to a central location on Campus made available 7 days a week from 7 am to 12 am including all holidays, until such time as Affected Residents are no longer prevented from occupying their residences in the Student Housing Facility and during the Moving Holdover Period; (iii) the actual cost of relocating the Affected Residents to and from temporary housing, including the management of the relocation process; (iv) in the event temporary housing is provided off-campus, the actual cost of providing University police patrol at the temporary housing properties that are off-campus until such time as no Affected Resident is occupying off- Campus temporary housing; (v) the actual cost of providing additional resident assistants to the extent necessary to maintain a 35:1 ratio of residents to resident assistant as a result of the dispersion of the Affected Residents; and (vi) any actual costs and expenses incurred by the University and the Project Company in connection with the oversight, coordination and assistance with relocation activities. The temporary housing to be provided to Affected Residents shall provide for no more than two students per room in non-smoking rooms, each room with two beds.

The cost of such temporary housing shall be borne by the Developer as provided in the Development Agreement; provided, however, the Developer shall be entitled to reimbursement for the actual cost incurred in connection with providing such alternative housing to the extent allowed under the Development Agreement and after payment of all liquidated damages owed by the Developer thereunder, if any.

If 90 days prior to August 2, 2020 the Developer or the University reasonably determines that the Developer will not receive the certificate of occupancy from the Town of Boone, the Borrower shall cause the Developer to be obligated under the terms of the Development Agreement to provide the University with a remedial plan to re-sequence and/or accelerate performance of construction work to achieve completion of the building in accordance with the Project Baseline Schedule.

THE OPERATING AGREEMENT

The University and the Borrower will enter into an Operating Agreement dated on or about the date of issuance of the Series 2019 Bonds. According to the Operating Agreement, the Borrower will engage the University for the performance of Maintenance Services and Administrative Services under the Ground Lease.

Pursuant to the Operating Agreement, the University is required to provide Administrative Services. Administrative Services means (i) certain programmatic, administrative, and academic services provided by University related to residential life and education functions in the Student Housing Facility, and (ii) administrative functions performed by University in connection with marketing, assignment, billing and

collection activities related to contracting of residential units with respect to the Student Housing Facility to be provided by the University in accordance with the Performance Standards, as further described in the Operating Agreement and budgeted in the Annual Budget. The Borrower and the University may amend, modify or supplement the nature, scope and allocation of Administrative Services, from time to time, provided, however, that any such change shall be made by a written amendment signed by the parties and, so long as such amendment is limited to changes in the nature, scope and allocation of Administrative Services shall not require the consent of any other Person. In addition to the description described in the preceding sentence, the University will determine Eligible Residents and will assign students into the Student Housing Facility in no less than equal priority to other housing facilities owned, lease, contracted and/or operated by the University or by others on behalf of the University.

Performance Standards. Means the required action or service shall be performed (i) in a prudent and efficient manner consistent with Good Industry Practices and University’s rules and regulations for operation, maintenance, repair, rehabilitation and renovation of comparable student housing facilities on the Campus that are owned, leased and/or operated by, or on behalf of, the University (but excluding any competitive bid/procurement requirements to which University is subject); and (ii) in accordance with the Operating Agreement and the Ground Lease.

Start-Up Period. Prior to the substantial completion of the Student Housing Facility, the University shall provide certain Administrative Services relating to putting the applicable building of the Student Housing Facilities into operation.

Marketing Activities. After completion of the Student Housing Facility and during the term of the Operating Agreement, the University will provide and supervise the marketing activities for the Student Housing Facility in the same manner as the student housing owned by the University. The costs of such marketing activities following completion of the Student Housing Facility shall be an Expense. The University shall market the beds of the Student Housing Facility on a basis consistent with the Annual Budget, Ground Lease and Bond Documents. The University shall market and lease the Student Housing Facility beds on a basis consistent with the Ground Lease, the Bond Documents and University’s existing housing policies and procedures and current and anticipated inventory of beds.

Rental Collection. The University hereby agrees to collect all revenues, fees, deposits and other payments due under any housing agreement and, together with such other revenues and income received from the operation of the Student Housing Facility, to promptly deposit all such amounts into the Revenue Account. University shall transfer all amounts on deposit in the Revenue Account to the Trustee no later than the fifteenth day of the month following the month of receipt. Transfers will take into account all cash collected by University with regard to the Student Housing Facility, as adjusted for any reimbursements required to be made by University to, or with respect to Eligible Residents in connection with approved changes in occupancy made in the ordinary course of business and consistent with University policy, the Ground Lease and the Operating Agreement, which revenues and reimbursements must be certified as to their accuracy by University to Borrower in writing and reasonably approved by Borrower. Any insurance proceeds or condemnation awards actually received by University with regard to the Student Housing Facility shall be deposited into the Revenue Account, or as otherwise directed by Borrower with approval of Borrower’s leasehold mortgagee, if applicable, no later than the Business Day following the receipt thereof by University.

Housing Agreement Enforcement. The University shall use commercially reasonable efforts to enforce all housing agreements and to collect all amounts due thereunder, including the withholding of grades, transcripts and diplomas in the event of nonpayment of such amounts. The University shall in the ordinary course of business enforce any such housing agreement for the collection of amounts due thereunder or dispossess any resident who has defaulted under his/her housing agreement or who does not meet the criteria of an Eligible Resident.

Advisory Committee. The Advisory Committee shall initially have five members consisting of the Assistant Vice Chancellor for Finance and Operations of the University, Director of University Housing and the Assistant Director of Facility Operations and Management of the University, or their respective designees, and the President and Vice President of the Borrower, or their respective designee. The Advisory Committee shall review and provide recommendations to the University and the Borrower regarding the proposed Annual Budget in a manner consistent with the Operating Agreement and Ground Lease. The establishment of the annual rates, fees and charges for the use of the Student Housing Facility shall require the unanimous approval of the Advisory Committee and otherwise comply with the terms of the Loan Agreement.

Maintenance and Repair. The University shall manage and schedule the performance of Maintenance Services (as described in the Operating Agreement) in a manner that is consistent with the applicable Annual Plan and Annual Budget, and in compliance with the Performance Standards and APPA level 2 custodial standards (or, if such APPA standards are no longer published or maintained, then such other objective custodial standards as may be agreed by the parties). The University is authorized, subject to and in accordance with the Annual Plan and Annual Budget, to purchase and procure all materials, equipment, tools, appliances, supplies and services necessary for the performance of Maintenance Services, in accordance with the applicable line items in the Annual Budget. The University, to the extent of the scope of Maintenance Services, is required to maintain or cause the Student Housing Facility to be maintained in first-class order, upkeep and repair, and keep the Student Housing Facility in a safe and sanitary condition, ordinary wear and tear excepted. The University shall receive, review and approve all invoices related to the Maintenance Services and timely pay such invoices from amounts on deposit in the Operating Account as long as they are consistent with the approved Annual Budget.

Utilities. The University, as Manager will make timely arrangements or cause timely arrangements to be made for services such as water, electricity, telecommunications, natural gas, sewage, trash collection services, recycling, trash disposal, landscape maintenance and vermin extermination for the Student Housing Facility consistent with the Ground Lease and services provided to student housing facilities owned by the University.

Personnel. All personnel of the University and its contractors shall possess applicable certifications, registrations, licenses and training required by applicable law and the University’s employment practices (and shall be consistent with the Performance Standards) for performance of the Maintenance Services allocated to such person.

Annual Budget. The University shall provide, in consultation with the Borrower, a line-item operation and capital budget for the Project for each Annual Period (collectively, the “Annual Budgets” and each an “Annual Budget”) generally in the form described in the Operating Agreement which shows, on a month-by-month basis, in reasonable detail, each line item of anticipated income and expense (on an accrual basis), broken out to include both Expenses and Subordinated Expenses, a proposed annual plan (the “Annual Plan”) which includes (among other things): (i) an update to the ten year capital plan, which shall be provided by the Borrower, that will consist of the overall plan for the repair, management, operation, improvement and maintenance of the Project including, without limitation, any recommendations made in the most recent Periodic Project Assessment for the Student Housing Facility and as otherwise approved by the Borrower and the University, as provided in the Bond Documents, (ii) an explanation of anticipated changes to resident charges, payroll rates and positions, non-wage cost increases, and all other factors differing from the current year, (iii) any proposed changes in operational programs, policies and procedures and the emergency response plans; and (iv) such other information, including a description of plans, contracts, agreements, governmental approvals and other matters, as may be necessary or reasonable in order to inform the Advisory Committee of all matters relevant to the ownership, operation and management of the Student Housing Facility or any portion thereof, and to otherwise allow the Advisory Committee to make an informed decision with respect to the approval of the Annual Budget and Annual Plan, and all information

required under the Bond Documents. The approval of the Annual Budget shall require the unanimous vote of the Advisory Committee.

Term. The Operating Agreement shall be in effect for a period commensurate with the Ground Lease, except as otherwise provided therein.

A copy of the completed draft of the Operating Agreement is available upon request of the Underwriter during the period of the offering of the Series 2019 Bonds.

THE ASSET MANAGEMENT AGREEMENT

The University and the Borrower will enter into an Asset Management Agreement dated on or about the date of issuance of the Series 2019 Bonds. According to the Ground Lease, the Borrower has the obligation to operate manage, maintain, repair, and potentially rehabilitate, replace and renovate the Student Housing Facility. In order to provide for such life-cycle management and maintenance of the Student Housing Facility the University and the Borrower have entered in the Asset Management Agreement such that the Borrower will provide Asset Management Services as described therein.

Asset Management Services consist of, but are not limited to, monthly financial reporting, maintenance of certain insurance, completion of punch-list and warranty management, common space and resident furniture replacement, energy monitoring, certain inspections of the Student Housing Facility including the foundation and slabs for defects and conducting necessary repairs thereon. Some of the Asset Management Services are conducted or inspected by the Advisory Committee as described therein.

The Borrower may sub-contract with the University for the provision of any Asset Management Services.

In consideration for providing the Asset Management Service in accordance with the provisions of this Agreement, the Borrower shall be entitled to be paid an annual fee equal to one half of one percent (0.50%) of the gross operating revenues of the Student Housing Facility, payable on a monthly basis from amounts on deposit in the Operating Account as an Expense.

Asset Management Costs. The Borrower shall receive, review and approve all invoices related to the Asset Management Services and timely pay such invoices from amounts on deposit in the Repair and Replacement Fund or the Operating Account, as applicable, as long as such costs are payable as an Expense and are consistent with the approved Annual Budget and the Annual Plan. To the extent any costs related to the Asset Management Services are payable from the Operating Account, Borrower shall request payment therefor by University and University agrees to promptly pay such costs from amounts available in the Operating Account. To the extent any costs related to the Asset Management Services are payable as a Subordinated Expense as identified in the Annual Budget, University agrees to promptly pay Borrower therefor from amounts available in the Secondary Reserve Fund in accordance with the Indenture. The Borrower shall make available to Advisory Committee copies of any such invoices promptly after a request from the Advisory Committee therefor.

Aesthetic and Operational Standards. It is the intent of the parties that the Student Housing Facility will be operated as a well-maintained facility, with all building systems in good, working condition at an APPA Maintenance Level 2 standards (Comprehensive Stewardship) (or, if such APPA standards are no longer published or maintained, then such other objective maintenance standards as may be agreed by the Parties), and in all material respects in accordance with the provisions of the Ground Lease and the Asset Management Agreement, including the Repair and Replacement Schedule, casualty and condemnation excepted. The Borrower’s performance of the Asset Management Services will be evaluated every five years commencing on or about the fifth anniversary of the date the Student Housing Facility is placed in service.

The parties acknowledge that the evaluation of Borrower’s performance of Asset Management Services hereunder is independent of the Periodic Project Assessments required to be performed under the Loan Agreement; however, the evaluation of the Borrower’s performance of the Asset Management Services may take into consideration the reports furnished in connection with each Periodic Project Assessment. The Advisory Committee will review the independent third party facility condition report to determine the Maintenance Level described in the prior sentence, and if required, will determine any recovery plan to bring the Student Housing Facility to the required Maintenance Level.

Annual Budget and Annual Plan. The Borrower will assist the University in preparation of the Annual Budget and the Annual Plan which describes and details projected Annual Maintenance Services expenses, as well as a plan which includes a description of the proposed overall capital reinvestment plan for the Student Housing Facility and the proposed plan for preventative maintenance of the Student Housing Facility, including any required governmental approvals for such work. The provision of goods or services will be provided by either the Borrower or the University based on which party can procure such goods or services on the most favorable terms.

Term. The Asset Management Agreement shall be in effect for a period commensurate with the Ground Lease, except as otherwise provided therein.

Default and Remedies. The Borrower shall be in default under the Asset Management Agreement hereunder upon the occurrence of the following (i) Borrower fails to perform any of its material obligations hereunder within thirty (30) days after notice from University, the Trustee or the Bond Insurer; provided, however, that if such breach or default is of a nature that it cannot reasonably be cured within such thirty (30) day period, then Borrower shall have such time as is reasonably required to cure such breach or default; provided that the period to cure such breach or default shall not exceed one hundred twenty (120) days and, provided further, that Borrower commences the cure within such thirty (30) day period following notice thereof and continues thereafter to diligently pursue completion of such cure; (ii) Borrower files a petition in bankruptcy or is adjudicated bankrupt or files any petition or answer seeking a reorganization, liquidation, dissolution or similar relief; (iii) any trustee, receiver or liquidator of Borrower is appointed and an action, suit or proceeding is instituted by or against Borrower and such proceeding or action has not been dismissed within sixty (60) days after such appointment; (iv) Borrower engages in fraud, misappropriation, embezzlement or in any willful misconduct; (v) Owner is in breach of its obligations regarding Aesthetic and Operational Standards; or (vi) Owner fails to complete any material capital component contained in an Annual Plan during the applicable Annual Period and such failure continues past the subsequent Annual Period.

Upon the occurrence and during the continuance of an Borrower Default, University shall be entitled to exercise any one or more or all of the following remedies: (i) commence proceedings against Borrower for damages and collect all sums or amounts with respect to which Borrower may then be in default and are accrued and unpaid (including amounts due under the provisions which survive termination); (ii) bring an action for specific performance; (iii) exercise any other right or remedy available at law or in equity; or (iv) terminate the Asset Management Agreement and either assume the responsibility for such services or arrange for a third-party contractor to perform such services, in each case as set forth in a written agreement that is acceptable to the Bond Insurer (so long as no Bond Insurer Default exists) provided, however, that except as expressly set forth in the Ground Lease, University shall have no right to exercise any right or remedy available at law or in equity which would result in the termination of the Ground Lease or the recovery of possession by University as the landlord thereunder. In addition to other rights of University upon a Borrower Default, University shall have the option, but not the obligation, to cure the act or failure constituting such Borrower Default for the account and at the expense of Borrower.

A copy of the completed draft of the Asset Management Agreement is available upon request of the Underwriter during the period of the offering of the Series 2019 Bonds.

THE PARKING FACILITY LEASE

General. Commensurate with the execution of the Ground Lease, the Borrower and the University will enter into the Parking Facility Lease, whereby the University will lease the Parking Facility from the Borrower. The Parking Facility consists of a structured parking facility containing approximately 477 parking spaces.

Term. The Parking Facility Lease has a term of ten years expiring on or about February 13, 2029 (the “Initial Term”). The University may at its election renew the Parking Facility Lease for a term not in excess of ten years on terms acceptable to the Borrower and the University.

Rent. The University will pay to the Trustee, for the account of the Borrower, installments of Basic Rent on each April 15 and October 15, commencing April 15, 2021, in funds that will be immediately available to the payee, an amount equal to the amount for each such date shown on the Schedule of Rent attached to the Parking Facility Lease. In addition to Basic Rent, the University shall pay as additional rent (“Additional Rent”) to the Trustee, in each Fiscal Year in which the Parking Facility Lease is in effect: (i) the Proportionate Share of the annual fee of the Trustee for the ordinary services of the Trustee rendered and its ordinary expenses incurred under the Indenture, as and when the same becomes due; (ii) the Proportionate Share of the reasonable fees, charges and expenses of the Trustee for necessary extraordinary services rendered by it and extraordinary expenses incurred by it under the Indenture, as and when the same become due; (iii) the Proportionate Share of the reasonable fees, charges and expenses of Borrower’s auditing firm for preparation of the annual audit and related advice; (iv) reimbursement of the Proportionate Share of the costs of any insurance required to be carried by the Borrower in order to comply with the Ground Lease or the Bond Documents, either with respect to the Parking Facility; (v) the Proportionate Share of the reasonable fees, charges and expenses of legal counsel or other professional consultants for advice deemed necessary by Borrower with respect to the Bonds, (vi) the reasonable fees, charges and expenses of legal counsel or other professional consultants for advice deemed necessary by Borrower with respect to the Parking Facility Lease or any matter related to the transactions contemplated hereby; (vii) the Proportionate Share of any fee or other charge by the Issuer with respect to the Bonds; (viii) the amount of any arbitrage rebate required to be paid with respect to the Bonds; (ix) any amounts indicated by the Periodic Project Assessment described in the Loan Agreement as necessary to fund the Parking Facility Account of the Repair and Replacement Fund, and (x) the Proportionate Share of such other amounts as shall be required in connection with the administration and payment of the Bonds; provided, that the University may, without creating a default hereunder, contest in good faith the necessity for any such extraordinary services and extraordinary expenses and the reasonableness of any such fees, charges or expenses. Based upon the original principal amounts of the Bonds, the Proportionate Share for the Student Housing Facility is 76% and the Proportionate Share for the Parking Facility is 24%.

The obligation of the University to pay Basic Rent and Additional Rent, to make all other payments provided for herein and to perform and observe the other agreements and covenants on its part herein contained shall be absolute and unconditional, irrespective of any rights of set-off, recoupment, abatement or counterclaim it might otherwise have against the Borrower; provided the, such obligation is payable only from funds appropriated for that purpose in any fiscal year. The University has agreed to include the Basic Rent and Additional Rent in its budget each fiscal year.

Maintenance, Alterations, Taxes and Insurance. The University will maintain, repair and replace the components of the Parking Facility when required from time to time as well as pay all utility charges needed for the use and upkeep of the Parking Facility. To the extent any taxes, governmental or utility charges are assessed or levied against the Parking Facility, the University shall be responsible for payment of the same; provided, however, the Borrower and the University acknowledge that under present law the Parking Facility is not subject to ad valorem taxation by the State or by any political or taxing subdivision

thereof. The Borrower and the University shall take out and maintain insurance as required by the Parking Facility Lease and be responsible for the costs thereof.

Net Lease. The University recognizes, understands and acknowledges that it is the intention hereof that the Parking Facility Lease be a net lease and that until the Bonds are fully paid all Basic Rent paid within any year of the Lease Term be available for payment of the principal of and interest on the Bonds and that all Additional Rent shall be available for the purposes specified therefor. The Parking Facility Lease shall be construed to effectuate such intent.

Events of Default. The following shall be events of default under the Parking Facility Lease and the term "event of default" shall mean, whenever used in the Parking Facility Lease, any one or more of the following events:

(i) failure to pay any installment of Basic Rent, Additional Rent or to make any other payment required hereunder that has become due and payable by the terms of the Parking Facility Lease;

(ii) failure by the University to observe and perform any covenant, condition or agreement on its part to be observed or performed, other than as referred to in subsection (i) above, for a period of thirty days after written notice, specifying such failure and requesting that it be remedied, given to the University by the Borrower or the Trustee, unless the Trustee and the Borrower shall agree in writing to an extension of such time prior to its expiration, which agreement shall not be unreasonably withheld if corrective action is instituted by the University promptly upon receipt of the written notice and is diligently pursued until the default is corrected; and

(iii) failure of the University promptly to lift any execution, garnishment or attachment of such consequence as will impair operations at the Parking Facility, the seeking of or consenting to or acquiescing by the University in the appointment of a receiver of all, or substantially all, of the property thereof or of the Parking Facility or the adjudication of the University as a bankrupt, or any assignment by the University for the benefit of its creditors.

Remedies. Whenever any such event of default shall have happened and be continuing, the Borrower or the Trustee may take any of the following remedial steps:

(i) Reenter the Parking Facility, without terminating the Parking Facility Lease, and, upon ten days' prior written notice to the University, relet the Parking Facility or any part thereof for the account of the University, for such term (including a term extending beyond the Lease Term) and at such rentals and upon such other terms and conditions, including the right to make alterations to the Parking Facility or any part thereof, as the Borrower may, with the approval of the Trustee, deem advisable, and such reentry and reletting of the Parking Facility shall not be construed as an election to terminate the Parking Facility Lease nor relieve the University of its obligations under the Parking Facility Lease, all of which shall survive such reentry and reletting, and the University shall continue to pay Basic Rent and all additional rent provided for in the Parking Facility Lease until the end of the current Renewal Term less the net proceeds, if any, of any reletting of the Parking Facility after deducting all of the Borrower's and the Trustee's expenses in connection with such reletting, including, without limitation, all repossession costs, brokers' commissions, attorney's fees, alteration costs and expenses of preparation for reletting;

(ii) Terminate the Parking Facility Lease, exclude the University from possession of the Parking Facility and, if the Borrower or Trustee elect so to do, lease the same for the account of the Borrower, holding the University liable for all rent due up to the date such lease is made for the account of the Borrower (but not beyond the then current Fiscal Year); and

(iii) Take whatever legal proceedings may appear necessary or desirable to collect the rent then due for the current Fiscal Year, whether by declaration or otherwise, or to enforce any obligation or covenant or agreement of the University under the Parking Facility Lease or by law.

THE UNIVERSITY

GENERAL

Appalachian State University (the “University” or “Appalachian”) is a comprehensive, state- controlled coeducational university that offers degrees at the baccalaureate, master’s and specialist’s levels as well as the Ed.D in Educational Leadership. Founded in 1899 as Watauga Academy, Appalachian has been a member institution of The University of North Carolina System since 1971. Appalachian is located in Boone, North Carolina, in the heart of the Appalachian Mountains. Close to the borders of Tennessee and Virginia, and less than two hours from the region’s airports and population centers, Boone offers advantages of both rural and urban settings. The area provides sports and cultural activities for all seasons of the year, making it a prominent recreation and tourist area.

Appalachian properties cover more than 1,850 acres and include the 410-acre main campus and several outlying properties. Located on the main campus are high-rise residence halls, academic buildings, athletic and recreational facilities, libraries, auditoriums, food services, research centers, a bookstore, a student union, a visual arts center, a central steam plant and parking decks. Located away from the main campus are the Physical Plant offices and shops, the Motor Pool, the Dark Sky Observatory, recreational areas, portions of the Controller’s Office, Administrative Support Services, New River Light and Power Company offices and electric power distribution facilities, Camp Broadstone, Sustainable Development Teaching and Research (Blackburn Vannoy) Farm in Ashe County, North Carolina Center for Engineering Technologies in Hickory, and the New York Loft.

The past five decades have brought dramatic changes to Appalachian. Student enrollment has grown from approximately 2,600 in Fall 1960 to 19,108 in Fall 2018. The 2018 Fall semester enrollment includes 17,788 on campus students in addition to students enrolled at other locations in the western and piedmont areas of North Carolina. Appalachian plans to control its growth and maintain a stable enrollment.

Numerous programs have been implemented at Appalachian to retain its tradition of providing personalized, quality instruction within a comprehensive university environment. In addition to maintaining relatively small classes taught by senior faculty, some courses have been designed for self-paced instruction and individualized study. To satisfy the needs of all types of students, alternative approaches to education have been introduced. One example is Watauga College, which creates a small residential cluster college within the confines of Appalachian.

Appalachian’s faculty and staff also demonstrate the priority given to quality instruction. Applying the American Association of University Professors definition of “faculty,” Appalachian employed 1,004 full- time instructional faculty in Fall 2018, 72% of whom held doctorate or first professional degrees. Part-time instructional faculty totaled 388 in Fall 2018 or 28% of the total faculty. The faculty represents a variety of academic and business backgrounds, enabling Appalachian to draw upon a wide range of experience and expertise. In addition to the faculty, Appalachian employed 1,796 staff and administrative personnel in Fall 2018.

ACADEMICS AND ENROLLMENT

The primary administrative organization of Appalachian includes the offices of the Chancellor, the Provost and Executive Vice Chancellor for Academic Affairs, the Vice Chancellor for Student Affairs, the Vice Chancellor for Business Affairs, and the Vice Chancellor for University Advancement. Appalachian

offers 226 major programs and eight different types of degrees at the undergraduate level (BA, BFA, BM, BS, BSBA, BSCJ, BSN and BSW), and nine different types of degrees at the graduate level (MA, MBA, MLS, MM, MMT, MPA, MS, MSA and MSW). Appalachian also offers majors leading to an Educational Specialist degree, one major leading to a Specialist in School Psychology, and one major leading to a Doctorate of Education. Several certificate programs are offered as well. During the 2017-18 Fiscal Year, 4,832 degrees were awarded: 4,080 baccalaureate degrees, 741 graduate and specialist’s degrees, and 11 doctoral degrees. In 2017-18, 505,781 student credit hours were generated, a 2.4% increase over the 494,167 student credit hours generated in 2016-17.

The enrollment at Appalachian for Fall 2018 was 19,108, including 16,767 main campus undergraduates and 614 distance education undergraduates, and 1,021 main campus graduate students and 706 distance education graduate students. The same semester, full-time students made up 94.5% of all undergraduates and 50.4% of all graduate students, and the undergraduate male-female student ratio was 43.8% male, 56.2% female. Out-of-state students made up 8.5% of all undergraduates and 12% of all graduate students.

The following table shows enrollment data for the 2014 through 2018 Fall semesters.

SELECTED ENROLLMENT DATA, FALL SEMESTER1

2014 2015 2016 2017 2018

Undergraduate Headcount 15,634 15,746 15,962 16,456 16,767 Graduate Headcount 1,002 1,031 1,102 1,081 1,021 Off-Campus Distance Learning 1,390 1,155 1,231 1,274 1,320 Total Headcount 18,026 17,932 18,295 18,811 19,108

Enrollment Data Undergraduate FTE 15,396 15,475 15,675 16,197 16,520 Graduate FTE 926 957 1,018 1,005 941 Off-Campus Distance Learning FTE 988 837 878 897 940 Total FTE 17,310 17,269 17,571 18,099 18,401 SAT scores first time Freshmen (combined)2 1156 1151 1134 1184 1186

Undergraduate Tuition, Fees Room & Board - resident 3 $13,438 $13,901 $14,416 $14,645 $14,835 Undergraduate Tuition, Fees $26,605 $27,727 $28,932 $29,452 $29,642 Room & Board – nonresident ______1 Enrollment data is compiled on a University of North Carolina System-wide basis, based on Fall enrollment data only. 2 Beginning Fall 2007, the SAT Test began scoring on a 2400 point scale. For smoothing purposes, the average SAT score is calculated on a 1600 point scale. 3 Beginning with the 2016-17 academic year, first year resident undergraduates were eligible to receive a fixed tuition rate for 8 semesters.

ADMISSIONS

The following table shows the number of students applying for admission as freshmen to Appalachian and the numbers accepted and enrolled in the past five years.

2014 2015 2016 2017 2018

Number of Applications 13,506 13,083 13,202 14,049 16,154 Number of Acceptances 8,463 8,684 9,020 9,826 11,221 Selectivity (%) 62.7% 66.4% 68.3% 69.9% 69.5% Number Enrolled 3,033 3,049 3,125 3,306 3,445 Matriculation (%) 35.8% 35.1% 34.6% 33.6% 30.7%

The average SAT score for the 2018 freshman class was 1186, one of the highest in the University of North Carolina System. 47% of the students in the 2018 freshman class graduated in the top fifth of their high school classes. For the 2018 fall semester, a total of 16,154 applications for admissions to Appalachian were processed. Graduate student applications numbered 1,514 with 44% enrolling. New transfer applications numbered 3,399 with 46% enrolling.

ANNUAL FEES AND CHARGES

The following table sets forth the annual fees and charges payable by students enrolled at Appalachian during the 2017-18 and 2018-19 academic years:

Fees and Charges1 2017-18 2018-19

Tuition (in-state) $ 4,242 $4,242 Tuition (out-of-state) 19,049 19,049 Educational and Technology Fee 576 576 Health Services Fee 325 325 Athletics Fee 760 760 Activities Fee 676 676 Facilities Debt Retirement Fee 579 634 Transportation Fee 144 150 Book Rental Fee 288 288 Student Government Fee 1 1

Total Tuition and Fees – Resident $7,591 $7,651 Total Tuition and Fees - Nonresident $22,398 $22,458

Standard Room $4,340 $4,470 Standard Board $2,714 $2,714 ______1 Undergraduate students taking fewer than 9 hours are charged prorated tuition and fees. Undergraduate students taking more than 9 hours but less than 12 hours are charged full fees and prorated tuition. Undergraduate students taking 12 hours or more are charged full fees and tuition. Graduate students taking 9 hours or more are charged full tuition minus the book rental fee, and an additional $557 for tuition. Graduate students taking fewer hours are charged a prorated amount of the tuition and fees.

CURRENT UNIVERSITY STUDENT HOUSING

Appalachian currently has fourteen traditional on-campus residence halls, one apartment style option, two hotel facilities, and three suite-style facilities for its students to choose from. All residence hall

rooms have basic digital cable television and internet access. Rooms are furnished with twin beds, dressers, desks, desk chairs and a closet or wardrobe. Residence hall rates include electricity, water and maintenance. Rates take into account the amenities available in each building (i.e., air conditioning, private bathrooms, in- room kitchenettes, etc.).

Descriptions of each of the properties, along with 2018-19 rental rates, are provided below:

NAME SIDE OF CAMPUS STYLE HALL GENDER RATE (SEMESTER / YEAR) Appalachian Heights West Side Apartment Co-Ed by suite $2,700.00 / $5,400.00 Appalachian Panhellenic Hall (APH) East Side Hotel Female $2,685.00 / $5,370.00 Belk Hall West Side Traditional Co-Ed by wing $2,488.00 / $4,976.00 Bowie Hall West Side Traditional Co-Ed by floor $2,235.00 / $4,470.00 Cannon Hall East Side Traditional Co-Ed by room $2,488.00 / $4,976.00 Coltrane Hall West Side Traditional Co-Ed by wing $2,235.00 / $4,470.00 Cone Hall East Side Traditional Co-Ed by wing $2,488.00 / $4,976.00 Doughton Hall East Side Traditional Co-Ed by room $2,488.00 / $4,976.00 East Hall East Side Traditional Co-Ed by wing $2,305.00 / $4,610.00 Eggers Hall West Side Traditional Female $2,235.00 / $4,470.00 Frank Hall West Side Traditional Co-Ed by wing $2,488.00 / $4,976.00 Gardner Hall West Side Traditional Co-Ed by wing $2,235.00 / $4,470.00 Hoey Hall East Side Traditional Co-Ed by wing $2,488.00 / $4,976.00 Justice Hall West Side Traditional Co-Ed by wing $2,305.00 / $4,610.00 Living Learning Center (LLC) West Side Suite Co-Ed by suite $2,600.00 / $5,200.00 Lovill Hall East Side Traditional Co-Ed by wing $2,488.00 / $4,976.00 Mountaineer Hall West Side Hotel Co-Ed by room $2,650.00 / $5,300.00 Newland Hall West Side Suite Co-Ed by suite $2,600.00 / $5,200.00 Summit Hall East Side Suite Co-Ed by suite $2,600.00 / $5,200.00 White Hall East Side Traditional Female $2,488.00 / $4,976.00

ON-CAMPUS HOUSING OCCUPANCY

DESIGNED ASSIGNED BEDS SEMESTER CAPACITY AT CENSUS OCCUPANCY % Fall 2014 5,515 5,524 100.2% Fall 2015 5,661 5,617 99.2 Fall 2016 5,661 5,697 100.6 Fall 2017 5,679 5,756 101.4 Fall 2018 5,674 5,723 100.9

FRESHMAN ON-CAMPUS HOUSING

FRESHMAN NUMBER OF COHORT CLASS FRESHMAN YEAR SIZE HOUSED % YIELD Fall 2014 3,033 3,006 99.1% Fall 2015 3,049 3,024 99.2 Fall 2016 3,125 3,099 99.2 Fall 2017 3,306 3,272 99.0 Fall 2019 3,442 3,398 98.7 Average % Yield 99.0%

ON-CAMPUS HOUSING POLICIES

Students entering the University as new freshmen are required to live on campus and are guaranteed housing. An exemption from the freshman housing requirement may be granted to students who meet any of the following criteria:

 Students who are married  Students who are single parents  Students who are veterans; and  Students living with parents/guardians within a 30-mile radius of campus.

The University also offers its students the option to reside in residence halls over the summer.

NO LIABILITY WITH RESPECT TO PAYMENT OF THE SERIES 2019 BONDS

The University will not have any obligation, express or implied, with respect to payment of the principal of, or the premium, if any, or interest on, the Series 2019 Bonds, and the University will not be responsible or liable, expressly or implicitly, for any obligations of any other party to any of the Bond Documents.

THE DEVELOPMENT AND THE DEVELOPMENT TEAM

THE DEVELOPER AND THE DEVELOPMENT AGREEMENT

General. The developer of the Series 2019 Bonds is RISE Boone, LLC, a limited liability company organized under the laws of the State of Georgia (the “Developer”).

With a portfolio of 80 campus developments, more than 48,000 beds of student housing and over $3.0 billion in development value, the Developer is an experienced leader in the student housing industry. Headquartered in Valdosta, Georgia, the Developer specializes in providing development and construction management services for both on- and off-campus student housing communities. The Developer’s expertise includes significant replacement housing projects with multiple phases of construction and demolition across multiple campus sites as well as single site new construction. In addition, the Developer has significant experience with dining halls, having developed facilities providing more than 4,000 dining seats and with parking facilities, providing more than 8,400 structured parking spaces. Finally, the Developer’s portfolio contains over 275,000 square feet of retail as a part of various mixed use facilities. The Developer manages over 11,000 student beds, 5,000 of which are on-campus, at institutions such as the University of Maryland, the University of Delaware, Youngstown State University, the University of Georgia, the University of Louisiana – Lafayette, the University of Virginia, North Georgia College & State University and the University of South Dakota.

The Development Agreement. The Borrower and the Developer will enter into the Development Agreement which will set forth certain terms and conditions relating to the development of the Series 2019 Project. The Development Agreement will obligate the Developer to cause the Series 2019 Project to be designed, permitted, constructed, furnished and equipped for a total cost of approximately $55,895,953 (subject to the terms and conditions of the Development Agreement, the “Total Development Budget Amount”). Certain items are subject to allowances within the Development Agreement, which if exceeded would cause the total cost to exceed the Total Development Budget. For its services as developer, the Developer will receive a development fee and be reimbursed for certain expenses as provided in the Development Agreement. To the extent there are any realized cost savings (as determined in accordance with the Development Agreement) and/or sales tax refunds, such amounts shall serve as additional

compensation to the Developer as set forth therein. The Developer expects to execute the Development Agreement at the time of the issuance of the Series 2019 Bonds.

The Borrower will grant to the Trustee a first priority security interest in its rights under the Development Agreement pursuant to the Assignment of Contracts. In the event of a default by the Borrower under the Indenture or the Development Agreement, the Trustee will be entitled to enforce performance of the Development Agreement by the Developer.

Pursuant to the Development Agreement, the Developer will be responsible for certain duties as described therein (the “Services”) including, but not limited to, the following:

(1) Acting as developer in connection with the development, permitting, design, construction, equipping and furnishing of the Series 2019 Project in accordance with the Construction Documents as approved by the Borrower and the University pursuant to the Development Agreement and delivering a Finally Complete Project on schedule and for a cost not exceeding the Total Development Budget Amount;

(2) Obtain and pay for with the assistance of the Borrower all necessary approvals by governmental and historical authorities having jurisdiction over the Series 2019 Project, including, but not limited to, land use approvals, environmental approvals, approvals of historical renovation (if any) and new construction in protected historical areas (if any), entitlements, and building and other permits and licenses for the lawful construction, use, and operation of the Series 2019 Project;

(3) Execute all agreements, purchase orders, amendments, and supplements related to design, development, and construction, including all survey, architectural, environmental, geotechnical, and other testing or consulting service agreements, the Architect’s Agreement, the Construction Contract, agreements for utility service, and such other agreements, amendments, and supplements as may be reasonably required for the furnishing of the Services;

(4) Completing the Series 2019 Project as required by the approved Construction Documents (as defined in the Development Agreement), subject to certain requirements of the Borrower set forth in the Ground Lease, including managing and monitoring the General Contractor construction work;

(5) Obtaining and submitting or causing to be obtained and submitted to the Borrower all certifications and other documents with respect to the Series 2019 Project pursuant to the Development Agreement and following procedures for obtaining applicable approvals from the University as required under the Ground Lease and set forth in the Development Agreement;

(6) Establishing and implementing appropriate administrative and financial controls for Project design, development and construction as well as monitoring services, work, equipment, materials and labor used on the Series 2019 Project so that Developer will have a reasonable basis to approve (or disapprove, as the case may be) before forwarding to the Borrower all professional invoices related to the Series 2019 Project and to determine that the Series 2019 Project is being designed, constructed and completed in accordance with the terms of the Development Agreement;

(7) Developer shall coordinate with the University and all applicable authorities for the installation of utilities at the Series 2019 Project;

(8) Coordinating the compilation of all record construction drawings for the Series 2019 Project, and operating and maintenance manuals for all applicable aspects of the Series 2019 Project and assisting the Borrower, together with the Architect in preparing the punch-list;

(9) Coordinate the processing of change orders, change directives, written minor revisions to the Services, and other submissions for approval;

(10) Developing and implementing procedures for the review and processing of applications by the General Contractor for progress and final payments pursuant to the Construction Contract, including the review and approval of the amounts due relative to each such application and forward such applications to Borrower for payment within the time frames required by the Construction Contract;

(11) During the correction period provided for under the Construction Contract, Developer shall use diligence and reasonable efforts to enforce all warranties under the Construction Contract and to cause the responsible contractors to cure all defects in the construction of the Project during the applicable warranty periods; and

(12) Assisting, and causing the General Contractor to assist, the Borrower in connection with its efforts to apply for a refund of sales taxes paid in connection with the Series 2019 Project. In this regard, Developer and the General Contractor shall furnish to the Borrower the required application and all related documentation as may be reasonably needed for Borrower to submit its application for such a refund at the earliest possible date that such application can be submitted with the appropriate taxing authority. Any refunded sales taxes to the Borrower shall be deposited in the Project Fund.

The Developer shall perform the Services described above to cause the Series 2019 Project to be developed, constructed and completed in accordance with the project schedule, as may be modified and amended as set forth in the Development Agreement (the “Project Schedule”). For purposes of determining “Substantial Completion” of the Student Housing Facility, the Developer shall be deemed to have obtained “Substantial Completion” for such upon satisfaction of the following requirements:

(1) the Work has been substantially completed as required by the Construction Documents and the requirements of the Development Agreement,

(2) all fixtures, furniture and equipment has been installed,

(3) all life safety and building mechanical systems corresponding to each building in such Phase have been installed in substantial accordance with the Construction Documents and have been tested and commissioned,

(4) a certificate of beneficial occupancy with respect to Student Housing Facility has been issued by the Town of Boone,

(5) Developer delivers a certificate of substantial completion for the Student Housing Facility as required by the Development Agreement, and

(6) a punch list of unfinished items with respect to each building in such Phase has been prepared by Developer and provided to the Borrower and University.

Pursuant to the Development Agreement, the Parking Facility must be Substantially Complete on or before August 12, 2019 and the Student Housing Facility must be Substantially Complete on or before

August 2, 2020 (the “Substantial Completion Deadline”), unless such deadline is extended from time to time as may be allowed in the Development Agreement (as referenced herein, each a “Date of Substantial Completion”).

The Developer and Borrower hereby acknowledge that the Services to be performed by Developer for the Development Fee plus the Guaranteed Maximum Price do not include the removal, abatement, remediation and related construction costs associated with the discovery of pre-existing Hazardous Materials at the Series 2019 Project site beyond that which are identified in, or reasonably inferable from, the reports identified in the Development Agreement. Should any other pre-existing Hazardous Materials be discovered at the Series 2019 Project site during the performance of the Services hereunder, the Borrower shall be responsible for entering into such contracts as may be necessary to remediate any such Hazardous Materials to the extent required by law in order for the Series 2019 Project to be constructed. Should any such other Hazardous Materials be discovered at the Series 2019 Project site during the performance of the Services hereunder that cause Developer to incur delay in the performance of Services on the critical path of the Project Schedule, Developer shall be entitled to an adjustment in the Guaranteed Maximum Price, the Development Fee, and the Date(s) of Substantial Completion (if applicable) as mutually agreed by the Borrower and Developer to the extent the discovery of such other Hazardous Materials affects the cost or time of the performance of the Services.

The Developer will have no obligation to make payments on the Series 2019 Bonds. However, the Developer shall be assessed liquidated damages as follows:

1. Liquidated Damages; Temporary Housing Costs; Parking Costs.

(i) If Substantial Completion of the Student Housing Facility does not occur by the applicable Date of Substantial Completion set forth in the Development Agreement, as the same may be modified or adjusted pursuant to the terms of the Development Agreement, the Developer shall arrange and pay for all costs of security, transportation, storage and temporary housing for affected residents as provided and subject to the limitations set forth in the Development Agreement, at its cost and expense, as liquidated damages and not as a penalty and as Owner’s sole and exclusive remedy (collectively the “Temporary Housing Costs”). Developer shall arrange and pay for such Temporary Housing Costs until such time as the Student Housing Facility is Substantially Complete.

(ii) If at any time prior to the Student Housing Facility Substantial Completion Date, Owner, in consultation with Developer, determines that University housing known as Justice Hall or East Hall must be prepared for occupancy, Developer shall pay to Owner, as a part of the Temporary Housing Costs, on receipt of any invoice by Owner or the University therefor, any costs incurred by Owner or the University in preparing such halls for occupancy and Owner and Developer will cooperate with Developer to reasonably mitigate any such costs. Notwithstanding the forgoing, in the event the Owner elects to prepare such halls for occupancy without the Developer’s concurrence, and with receipt of reasonable assurances by Developer of timely delivery and the Developer delivers occupancy of the units in a time and manner such that the residents of the new improvements are not displaced and required to be furnished with alternate housing accommodations, then such costs incurred by the Owner in preparing such halls for occupancy shall be borne by the Owner without reimbursement by the Developer.

(iii) Coordination of Temporary Parking. Commencing on August 12, 2019, if Substantial Completion of the Parking Facility has not occurred as a result of a delay attributable to the Developer or those for whom the Developer is responsible, Developer shall arrange for temporary parking within a reasonable distance from campus for each individual who has purchased an annual parking permit or Yosef Club membership for the Parking Facility and is unable to utilize the Parking Facility (“Affected Parking Permit Holder”) until such time as the Parking Facility is

Substantially Complete. To the extent that unused parking spaces are available on campus, the Developer may utilize those spaces as temporary parking. The Developer may also coordinate with the University to create new temporary parking spaces on University-owned property, with locations and conditions subject to the approval of the University. The Developer will provide for appropriate security at off-campus temporary parking and transportation throughout the day between any off- campus temporary parking and the University.

(iv) To the extent that the Parking Facility has not attained Substantial Completion as a result of a delay attributable to the Developer or those for whom the Developer is responsible, and is not accessible during University Housing move-in activities or a football home game, the Developer’s arrangements for temporary parking will provide appropriate service to those events. In that case, the Developer will coordinate with the relevant University departments to provide move-in and game day experiences acceptable to the University. Furthermore, the Developer will be assessed liquidated damages for lost revenue in the amount of $198,750 for each home football game for which the Parking Facility is not accessible, payable to the University. The Developer also will be assessed $954 per day for each day following the first home football game in 2019 that the Parking Facility has not attained Substantial Completion.

Payment of any liquidated damages shall be in addition to, and not in lieu of, Developer’s other obligations under the Development Agreement and shall in no way affect the Borrower’s rights and remedies under the Development Agreement including the right to terminate the Development Agreement or remedies contemplated in the Development Agreement for any other aspect of Developer’s obligations thereunder. Notwithstanding the foregoing and without limitation of the Borrower’s rights to terminate the Development Agreement, liquidated damages shall be Borrower’s sole and exclusive remedy for delayed performance or delayed completion of the Student Housing Facility, and the Parking Facility, as applicable by Developer.

Neither party to the Development Agreement shall be in default to the extent that any of the following delays its performance or makes its performance impossible or impracticable with respect to a Critical Path Item (as defined in the Development Agreement) and such delay or non-performance is not caused by the negligence, lack of diligence or willful misconduct of the affected party or persons and entities under its control and beyond the affected party's reasonable control (“Force Majeure”): act of God, war, act of terrorism, civil commotion, governmental action (excluding governmental action caused or occasioned by the misconduct of the party claiming Force Majeure), fire, storm, flood, explosion, strike, walkout, other industrial disturbance, unexpected unavailability of labor or materials, Abnormally Adverse Weather (defined in the Development Agreement). A party whose performance is affected by Force Majeure shall use diligent efforts to end the failure or delay and minimize the effects of such Force Majeure Event and shall continue to perform obligations not affected by the Force Majeure Event.

The Total Development Budget includes a category for “Project Contingency” and is for Developer’s exclusive use to pay for costs that are incurred in performing the Services. Such costs may include, but are not limited to, costs associated with acceleration, overtime, attributable to design errors and omissions, correcting defective, damaged, or nonconforming work, and contractor and subcontractor defaults. Developer’s Project Contingency is not available to the Borrower for any reason (including changes in scope or any other item that might cause the Development Budget to be exceeded) until after a determination, pursuant to the Development Agreement, whether any Project Savings exist. Any such Project Savings shall be shared between Borrower and Developer in accordance with the provisions of the Development Agreement. In the event Developer expends amounts from the Developer’s Project Contingency and such amounts may be recovered from other responsible third parties (through insurance proceeds or otherwise), and it is commercially reasonable to pursue recovery of the same, the Developer shall replenish the Developer’s Project Contingency with such amounts actually recovered less the costs and expenses reasonably incurred by Developer in the process of recovering the same.

Events of Default; Remedies. The Developer shall be in default under the Development Agreement upon an Event of Default by Developer hereunder (a Default, after expiration of any applicable grace or cure period hereunder, shall constitute an “Event of Default”). Default by Developer includes any one or more of the following:

(a) Developer files a voluntary proceeding under any bankruptcy or insolvency laws, or is the subject of an order of relief under any present or future law relating to bankruptcy, insolvency or other relief for debtors;

(b) Developer seeks, consents to or acquiesces in the issuance of an order of relief, appointment of any trustee, receiver, custodian, conservator or liquidator of Developer, for all or any substantial part of its properties (“acquiesce” includes the failure to file a petition or motion to vacate or discharge any order of relief, judgment or decree providing for that appointment within the time specified by law);

(c) A court of competent jurisdiction enters an order of relief, judgment or decree approving an involuntary bankruptcy proceeding filed against Developer;

(d) Developer seeks any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future law relating to bankruptcy, insolvency or other relief for debtors, or Developer consents to or acquiesces (as defined above) in the entry of an order of relief, judgment or decree, or it is not vacated and not stayed for an aggregate of 60 days after its entry;

(e) Any trustee, receiver, custodian, conservator or liquidator of Developer or of all or any substantial part of its properties is appointed without the consent or acquiescence of Developer and that appointment is not vacated and not stayed for an aggregate of 60 days;

(f) Developer fails, subject to the Development Agreement, to remove, discharge or bond a lien, encumbrance or security interest filed by a claimant asserting such claim through or under Developer;

(g) Developer materially fails or refuses to provide any of the Services or to perform any other material obligation under the Development Agreement in the manner and within the time required by the Development Agreement; or

(h) Developer or a consultant commits or permits a material breach of any of Developer’s duties, liabilities or obligations under the Development Agreement, and such breach is incapable of cure or continues beyond the cure periods described below.

The Borrower shall provide Developer with written notice of any Default that describes the nature of the Default. Upon receipt of such notice, Developer will have fourteen (14) days to cure the Default. If a Default is capable of cure but cannot reasonably be cured within fourteen (14) days, then such Default shall not be an Event of Default so long as Developer begins the cure promptly upon receipt of the Borrower’s written notice of Default and then diligently and continuously pursues the cure thereof.

In addition to other remedies at law or in equity, in the event (i) an Event of Default occurs under any of (a) through (e) above, (ii) Developer fails or is unable to achieve the respective Substantial Completion Date, as the same may be modified pursuant to the terms of the Development Agreement, or (iii) if Developer fails to cure any other Event of Default within the applicable cure period after receipt of written notice that specifically identifies the Event of Default, then Borrower, in the exercise of rights and remedies hereunder, at the direction of or the University’s or the Series 2019 Bond Insurer’s approval, may cancel and terminate the Development Agreement by providing written notice thereof to Developer, whereupon the Development Agreement shall terminate effective as of the date of such notice except for the provisions which expressly survive the termination of the Development Agreement

In the event the Borrower elects to terminate the Development Agreement as provided for herein, the Borrower shall so notify the Developer in writing of its decision to so. Upon termination, any right of the Borrower or obligation of Developer in the Development Agreement which, by its nature, should survive termination or expiration of the Development Agreement, including the obligation of the parties thereto to accomplish a transfer of documents, data and information and equipment, materials, supplies and rights and interests necessary to accomplish a smooth transition that minimizes an adverse impact on the Series 2019 Project will survive any such termination or expiration of the Development Agreement.

If Developer has submitted a Draw Request in the manner prescribed in the Development Agreement and such Draw, to the extent approved by the Borrower, is not paid within thirty (30) days of the date such Draw became due pursuant to the terms of the Development Agreement, the Developer may notify the Borrower, the University, the Series 2019 Bond Insurer and the Trustee in writing of its intent to terminate the Development Agreement. Upon receipt of such notice, the Borrower shall have ten (10) days to make payment of the amount(s) then due and payable. If the Borrower does not make payment to the Developer within such ten (10) day period, then the Developer may terminate the Development Agreement. The University may (but shall not be obligated to), upon written notice to Developer given within ten (10) days following the expiration of the applicable Borrower cure period, and without assuming the Development Agreement or any obligations or liability of Developer, undertake the cure of the Event of Default by the Borrower on behalf of the Borrower and at the Borrower’s expense. If the University undertakes such cure it shall have an additional ten (10) days for monetary defaults and thirty (30) days for other defaults in which to cure such Event of Default or, except for monetary defaults, to commence and diligently pursue such cure. The University may at any time following notice of undertaking the cure of such Event of Default, abandon such efforts without any obligation or liability to Developer by written notice to the Developer.

THE GENERAL CONTRACTOR

General. The Developer and Choate Construction Company (the “General Contractor”) will enter into a construction contract (the “Construction Agreement”) pursuant to which the General Contractor will agree to construct the Series 2019 Project. The General Contractor is a general construction contractor and is licensed to do business in North Carolina. Founded in 1989, Choate Construction was a basement start-up created during a recession when construction projects were sparse and the employee roster small. Today, the General Contractor employs over 400 full-time professions and is 100% employee owned. The General Contractor provides general contracting and construction management services. The General Contractor has completed student housing projects benefitting students attending Western Carolina University, Elon University, University of Georgia, Kennesaw State University and West Virginia State University, among others.

The Construction Agreement will obligate the General Contractor to construct the Series 2019 Project within the time frames set forth therein. The General Contractor shall achieve Substantial Completion (as defined in the Construction Agreement) of the Parking Facility and the Student Housing Facility by August 2, 2019 and August 2, 2020, respectively. The General Contractor is to furnish bonds covering faithful performance of the Construction Agreement and payment of obligations arising thereunder as stipulated in the Construction Agreement. The General Contractor’s surety shall be responsible for the General Contractor’s obligations under the Construction Agreement, including, without limitation, the liquidated damages and indemnity obligations hereunder. The Construction Agreement provides for liquidated damages in the event the General Contractor fails to achieve Substantial Completion as described above, subject to certain circumstances described therein. Such liquidated damages, if any, will be paid directly to the Developer.

THE ARCHITECT

The Developer has entered into an agreement (the “Architect’s Agreement”) with Niles Bolton Associates, Inc. (the “Architect”) relating to the Series 2019 Project.

Entering its 44th year in business, the Architect is a full-service architectural firm that has developed a national reputation for work in mixed-use developments, multi-family housing, student housing, transportation, retail, universities, clubhouses, schools, hotels, military and resorts. The Architect has served as architect on a wide mix of student housing projects, including traditional residence halls, apartment style facilities and mixed-use residential villages, comprising more than 70,000 residence hall beds on over 70 campuses. Additionally, the Architect and the Developer have completed over 35,000 beds on 50 campuses together since 1999.

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2019 BONDS

LIMITED OBLIGATIONS

Neither the members of the Authority nor any person executing the Series 2019 Bonds shall be liable personally on the Series 2019 Bonds by reason of the issuance thereof. The Series 2019 Bonds are payable solely, except to the extent paid out of moneys attributable to the proceeds of the Series 2019 Bonds and from temporary investment thereof, from the Security (as such term is defined in the Indenture) and from a pledge of moneys derived from the Loan Agreement between the Authority and the Borrower.

LEASEHOLD DEED OF TRUST AND SECURITY AGREEMENT

As security for the obligations of the Borrower to the Authority under the Loan Agreement and the Series 2019 Notes, the Borrower will execute and deliver to the Trustee (i) the Leasehold Deed of Trust pursuant to which the Borrower will, subject to Permitted Encumbrances, grant to the Deed of Trust Trustee for the benefit of the Trustee a first security title in and to its interest in the Premises and will, subject to Permitted Encumbrances, grant to the Deed of Trust Trustee for the benefit of the Trustee a first priority security interest in the leases, rents, issues, profits, revenues, income, receipts, moneys, royalties, rights, and benefits of and from the Premises and (ii) the Security Agreement pursuant to which the Borrower will, subject only to Permitted Encumbrances, pledge, assign and grant to the Trustee a security interest in the Pledged Revenues, the accounts, documents, chattel paper, instruments, and general intangibles arising in any manner from the Borrower’s ownership or operation of the Premises, the Inventory, and the Equipment. The lien created by the Leasehold Deed of Trust is subject to the rights of the Ground Lessor under the Ground Lease as the fee simple owner of the Property. The Leasehold Deed of Trust does not constitute a

lien on the Ground Lessor’s fee simple interest in the Property. Because of certain risks associated with pledging, assigning and granting a security interest in collateral of this nature, prospective purchasers should not rely upon such collateral as providing any significant security for the Series 2019 Bonds. See “CERTAIN BONDHOLDERS’ RISKS - PLEDGE AND ASSIGNMENT OF, AND GRANT OF SECURITY INTEREST IN, FUTURE REVENUES” herein.

PLEDGE OF PLEDGED REVENUES

As security for the obligations of the Borrower to the Authority under the Loan Agreement and the Series 2019 Notes, under the Security Agreement, the Borrower will, subject only to Permitted Encumbrances, pledge, assign and grant to the Trustee a first priority security interest in the Pledged Revenues and the accounts, documents, chattel paper, instruments, and general intangibles arising in any manner from the Borrower’s ownership or operation of the Series 2019 Project.

Because of certain risks associated with pledging, assigning and granting a security interest in collateral of this nature, prospective purchasers should not rely upon such collateral as providing any significant security for the Series 2019 Bonds.

PLEDGE AND ASSIGNMENT OF TRUST ESTATE

Pursuant to the Indenture, and in order to secure the payment of the Debt Service Payments on the Series 2019 Bonds according to their tenor and effect, the payment of the Series 2019 Insurer Reimbursements and to secure the performance and observance by the Authority of the covenants expressed in the Indenture and in the Series 2019 Bonds, the Authority will grant to the Trustee a first priority security interest in the following (the “Trust Estate”) which will consist of:

(i) all the right, title, and interest of the Authority in and to (a) the Loan Agreement (except for Unassigned Rights) and any loan, financing, or similar agreement between the Authority and the Borrower relating to Additional Bonds and (b) the Series 2019 Notes and any other Notes, and all extensions and renewals of the terms thereof, if any, and all amounts encumbered thereby, including, but without limitation, the present and continuing right to make claim for, collect, receive, and make receipt for payments and other sums of money payable, receivable, or to be held thereunder, to bring any actions and proceedings thereunder or for the enforcement thereof, and to do any and all other things that the Authority is or may become entitled to do under the foregoing;

(ii) all the right, title, and interest of the Authority in and to all cash proceeds and receipts arising out of or in connection with the sale of the Series 2019 Bonds and all moneys held by the Trustee in the funds created under the Indenture (excluding the Rebate Fund and the Secondary Reserve Fund), including the Revenue Fund, the Bond Fund, the Redemption Fund, the Debt Service Reserve Fund, the Issuance Cost Fund, the Construction Fund, the Repair and Replacement Fund, the Insurance Fund, the Condemnation Fund, the Operations Contingency Fund, and the Surplus Fund created thereunder, or held by the Trustee as special trust funds derived from insurance proceeds, condemnation awards, payments on contractors’ performance or payment bonds or other surety bonds, or any other source;

(iii) all the right, title, and interest of the Authority in and to all moneys and securities and interest earnings thereon from time to time delivered to and held by the Trustee under the terms of the Indenture, and all other rights of every name and nature and any and all other property from time to time hereafter by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned, or transferred as and for additional security thereunder by the Authority or by anyone on its behalf or with its written consent to the Trustee; and

(iv) all other property of every name and nature from time to time by delivery or by writing mortgaged, pledged, delivered, or hypothecated as and for additional security under the Indenture by the Authority or by anyone on its behalf or with its written consent in favor of the Trustee.

Under the Indenture, upon the occurrence of an Event of Default, the rights of the owners of the Series 2019 Bonds to the Trust Estate, to the extent provided for, are subject to a prior lien to secure the payment of all fees and expenses of the Trustee, and the Trustee may apply moneys received by it pursuant to any action taken by it in accordance with the Indenture in connection with such Event of Default to the payment of the costs and expenses of the proceedings resulting on the collection of such moneys and to the payment of the expenses, liabilities, and advances incurred or made by the Trustee and the Authority prior to its applying such moneys to the payment of Debt Service Payments on the Series 2019 Bonds.

Unless an Event of Default shall occur and be continuing, the Borrower will be permitted to possess and use the Security (as such term is defined in the Indenture) (except cash, securities, and other personal property deposited with the Trustee) and receive and use the revenues, issues, profits, and other income of the Security (except cash, securities, and other personal property required to be deposited with the Trustee).

Because of certain risks associated with granting a security interest in collateral of the nature described above, prospective purchasers should not rely solely upon such collateral as providing security for the Series 2019 Bonds. See “CERTAIN BONDHOLDERS’ RISKS - PLEDGE AND ASSIGNMENT OF, AND GRANT OF SECURITY INTEREST IN, FUTURE REVENUES” herein.

ASSIGNMENT OF CONTRACTS

The Borrower will, as security for the obligations of the Borrower to the Authority under Loan Agreement and the Series 2019 Notes and subject only to Permitted Encumbrances, under the Assignment of Contracts pledge, assign and grant to the Trustee a security interest in all of its right, title, and interest in and to the Operating Agreement, the Parking Facility Lease, the Asset Management Agreement, the Developer Collateral Assignment and the Development Agreement. As further security for the Developer’s obligations under the Development Agreement, the Developer will collaterally assign to the Borrower its rights under the Construction Agreement and the Architect’s Agreement, and the Borrower will assign such rights to the Trustee under the Assignment of Contracts.

FUNDS HELD UNDER THE INDENTURE

Revenue Fund. Under the Indenture, a Revenue Fund will be created and will be funded with the Pledged Revenues (other than Sales Tax Refunds and Net Proceeds of insurance other than business interruption, business income, or loss of rents insurance, which shall be deposited to the Construction Fund pursuant to the Loan Agreement) on a monthly basis by the Borrower; provided, however, during any Construction Period in which the Pledged Revenues are insufficient to make such transfers to the Bond Fund as described below, funds held in any Capitalized Interest Account shall be transferred to the Bond Fund in accordance with the Indenture. The amounts deposited in the Revenue Fund will be transferred or paid by the Trustee to the following funds and/or persons in the order and amounts on the dates indicated.

(a) The Trustee will transfer amounts to the Bond Fund, as follows:

(i) on or before February 20, 2019, and on or before the twentieth (20th) day of each month thereafter to and including June 20, 2019, a sum equal to one-fifth (1/5th) of the amount payable on July 1, 2019 as interest on the Series 2019 Bonds, or such lesser amount that, together with amounts already on deposit in the Bond Fund and available therefor, will be sufficient to pay interest on the Series 2019 Bonds to become due on July 1, 2019, as provided in the Indenture;

(ii) on or before July 20, 2019, and on or before the twentieth (20th) day of each month thereafter, a sum equal to one-sixth (1/6th) of the amount payable on the immediately succeeding Interest Payment Date as interest on the Series 2019 Bonds, or such lesser amount that, together with the amounts already on deposit in the Bond Fund and available therefor, is sufficient to pay interest on the Series 2019 Bonds to become due on the immediately succeeding Interest Payment Date, as provided in the Indenture;

(iii) on the dates set forth in any amendment or amendments to the Loan Agreement executed in connection with the issuance of Additional Bonds, the amount(s) set forth therein to be paid by the Borrower in respect of interest on such Additional Bonds;

(iv) on or before July 20, 2021, and on or before the 20th day of each month thereafter, to and including June 20, 2058, a sum equal to the sum of (i) 1/12th of the principal due on the immediately succeeding July 1 that is a maturity date of the Series 2019 Bonds and (ii) 1/12th of the Mandatory Sinking Fund Redemption Requirement;

(v) on the dates set forth in any amendment or amendments to the Loan Agreement executed in connection with the issuance of Additional Bonds, the amount(s) set forth therein to be paid by the Borrower in respect of the principal of such Additional Bonds (whether at maturity or under any mandatory sinking fund or other similar redemption requirements of any supplemental indenture or indentures executed in connection with the issuance of such Additional Bonds);

(vi) on the Business Day immediately preceding any date on which the Series 2019 Bonds are to be redeemed pursuant to the mandatory redemption provisions of the Indenture (other than mandatory sinking fund redemption pursuant to the Indenture), an amount equal to the Redemption Price of the Series 2019 Bonds to be redeemed (taking into account amounts then on deposit in the Bond Fund and the Redemption Fund available to be used for the payment of such Series 2019 Bonds to be redeemed); and

(vii) on the Business Day immediately preceding any date on which any Additional Bonds are to be redeemed pursuant to any mandatory redemption provisions of any supplemental indenture or indentures executed in connection with the issuance of Additional Bonds (other than mandatory sinking fund or other similar redemption pursuant to such supplemental indenture or indentures), an amount equal to the Redemption Price of such Additional Bonds to be redeemed (taking into account amounts then on deposit in the Bond Fund and the Redemption Fund available to be used for the payment of such Additional Bonds to be redeemed);

(b) The Trustee will transfer amounts to the Rebate Fund and the Account(s) therein, as follows: on the dates that the Borrower provides any calculation of the Rebate Amount to the Trustee in accordance with Section 511(c) of the Indenture, the amounts determined by the Borrower to be equal to the excess, if any, of the Rebate Amount so calculated over the amount then in the Rebate Fund;

(i) promptly upon request, an amount equal to the annual fee of the Trustee for the Ordinary Services of the Trustee rendered, and the Ordinary Expenses of the Trustee incurred, hereunder and under the other Bond Documents, as and when the same shall become due,

(ii) the reasonable fees and charges of the Trustee, as bond registrar and paying agent, and of any other paying agents on the Bonds for acting as paying agents as provided herein, as and when the same shall become due, and

(iii) the reasonable fees and charges of the Trustee for the Extraordinary Services of the Trustee rendered by it, and the Extraordinary Expenses of the Trustee incurred by it, hereunder and under the other Bond Documents, as and when the same shall become due; provided, that the Borrower may, without creating an Event of Default under the Indenture, contest in good faith the reasonableness of any such Extraordinary Services of the Trustee and Extraordinary Expenses of the Trustee and the reasonableness of any such fees, charges, or expenses;

(d) The Trustee will pay to the Authority any and all Authority Additional Payments that may come into the Trustee’s possession promptly on receipt thereof from the Borrower and receipt of evidence that such Authority Additional Payments are due, which payments will be paid to the Authority at the address specified in the Indenture for notice to the Authority or as otherwise directed by the Authority; except that payments of the Authority’s Annual Fee will be remitted to the Authority at the times specified in the Loan Agreement;

(e) The Trustee will transfer amounts to the Operating Account, as follows: on the 20th day of each month, for deposit into the Operating Account, an amount equal to the greater of (A) the amount budgeted in the Annual Budget for such Expenses (other than Subordinated Expenses or those Expenses provision for the payment of which has otherwise been made in the Indenture) for the immediately succeeding month or (B) such other amount, if any, specified in prior written instructions provided to the Trustee by the Borrower and approved by the University; provided, however, if, during any Annual Period, it shall be determined that an Operating Account Surplus exists with respect to the immediately preceding Annual Period, such transfer to the Operating Account will be reduced by the amount of such Operating Account Surplus, if any, and the amount of the Operating Account Surplus, if any, shall then be adjusted by the amount of such reduction; and provided further that, the amount deposited to the Operating Agreement on the 20th day of April and May of each year will not be treated as Operating Account Surplus, but will be credited against the amount required to be deposited to the Operating Account on the 20th day of June of such year;

(f) The Trustee will transfer amounts to the applicable account of the Debt Service Reserve Fund, as follows: if any amounts are withdrawn from the applicable account of the Debt Service Reserve Fund, if there shall be a diminution in Value of the cash and investments held in the applicable account of the Debt Service Reserve Fund as of any Valuation Date, or if any net losses shall result from the investment of amounts held in the applicable account of the Debt Service Reserve Fund that shall reduce the Value of the cash and investments in the applicable account of the Debt Service Reserve Fund to less than the applicable Debt Service Reserve Requirement as of any Valuation Date, beginning on the 20th day of the month following notice from the Trustee of such withdrawal, diminution in Value, or losses, and on the 20th day of each month thereafter, 12 consecutive monthly payments, each equal to 1/12th of the amount of such withdrawal, diminution in Value, or losses, including any amounts owing to the Series 2019 Bond Insurer on account of a draw on the Series 2019A Reserve Policy, in all instances necessary to restore the applicable account of the Debt Service Reserve Fund to the applicable Debt Service Reserve Requirement;

(g) The Trustee will transfer amounts to the Repair and Replacement Fund, as follows: (1) if any funds have been withdrawn from the Repair and Replacement Fund to pay Debt Service Payments in accordance with the Indenture, there will be transferred to the Repair and Replacement Fund, beginning on the 20th day of the month following any such withdrawal and continuing on the 20th day of each month thereafter the greater of (i) the lesser of (A) 1/12th of the amount of such withdrawal, or (B) such amount that is necessary to reimburse the Repair and Replacement Fund for all such withdrawals, or (ii) such amount as will be directed in writing by the Borrower; and (2) commencing on the 20th day of the first month following the Completion Date for Building 100 and the Completion Date for any Student Housing Facility under the Indenture, an amount in equal monthly installments necessary to equal the Repair and Replacement Fund Requirement (or portion thereof for the partial Annual Period in which Building 100 or any additional Student Housing Facility, as the case may be, is completed) set forth in the Indenture (as such exhibit may be

amended to include additional Student Housing Facilities) and any and all additional amounts required to be deposited therein following a Period Project Assessment in accordance with the Indenture and the Loan Agreement or by any amendment or amendments to the Loan Agreement executed in connection with the issuance of Additional Bonds.

(h) Following the issuance of Additional Bonds under the Indenture, and a corresponding amendment or amendments to the Loan Agreement to reflect the issuance of such Additional Bonds, the Trustee will transfer to the appropriate fund or funds set forth above any and all additional amounts required to be deposited into such fund or funds on the date(s) specified therein; and

(i) Provided no Event of Default has occurred and is continuing on the last Business Day of each month, the Trustee will transfer any amounts remaining in the Revenue Fund to the Operations Contingency Fund. Amounts in the Operations Contingency Fund will be used as described in the Indenture and amounts remaining in the Operations Contingency Fund will be transferred annually to the Surplus Fund as described below under “Operations Contingency Fund”.

Construction Fund. Under the Indenture, a construction fund (the “Construction Fund”) is created and is available to pay Costs of the Project. Each payment from the Construction Fund shall be made by the Trustee, based on a requisition signed by an authorized representative of the Borrower and the University, to the payee shown on the disbursement request, upon receipt by the Trustee of an application for payment that on its face appears to be in compliance with the requirements of the Loan Agreement. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS – THE LOAN AGREEMENT” in Appendix D hereto.

Upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the 2019A Account of the Construction Fund will not be disbursed, and if the 2019 Bond Insurer and Borrower so direct, will be applied to the Debt Service Payments or redemption price of Series 2019 Bonds. For additional information regarding the Construction Fund, see Appendix D “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS – The Indenture – Construction Fund.”

Debt Service Reserve Fund. Under the Indenture, a debt service reserve fund (the “Debt Service Reserve Fund”) will be created and, within it, a Tax-Exempt Account and a Taxable Account. The Tax- Exempt Account will be funded in an amount equal to the Debt Service Reserve Requirement for the Series 2019A Bonds as of the Closing Date. Half of the Debt Service Reserve Requirement for the Series 2019A Bonds will be funded from proceeds of the Series 2019A Bonds and the other half will be initially funded with the Series 2019A Reserve Policy. The Taxable Account will be funded in an amount equal to the Debt Service Reserve Requirement for the Series 2019B Bonds as of the Closing Date from proceeds of the Series 2019B Bonds. Under the Indenture, the Trustee will be authorized to transfer to the Bond Fund amounts held in the applicable account of the Debt Service Reserve Fund to pay the applicable Debt Service Payments then due on the applicable series of the Series 2019 Bonds and on any Additional Bonds to the extent that there are insufficient funds available for such purposes in the Bond Fund, the Redemption Fund, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund), the Operations Contingency Fund and the Repair and Replacement Fund on the date such Debt Service Payments are due. Any withdrawals for this purpose from the applicable account of the Debt Service Reserve Fund will be required to be restored by payments of Reserve Loan Payments by the Borrower. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - The Indenture -- Revenue Fund, - Debt Service Reserve Fund” and “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - The Loan Agreement -- Reserve Loan Payments” in Appendix D hereto. See “BOND INSURANCE” for more information regarding the Series 2019 Bond Insurer.

No letter of credit, surety bond, insurance policy or other credit facility, other than the Series 2019A Reserve Policy, may be credited to the Tax-Exempt Account of the Debt Service Reserve Fund in lieu of cash and other investments without the express written consent of the Series 2019 Bond Insurer.

Repair and Replacement Fund. The Repair and Replacement Fund will be a trust fund that will be funded from moneys on deposit in the Revenue Fund. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - The Indenture – Repair and Replacement Fund” in Appendix D hereto. The money in the Repair and Replacement Fund will be disbursed by the Trustee for the costs of maintenance and repair of the Series 2019 Project or to the extent Net Proceeds are insufficient for such purposes, to the costs of restoration or replacement of the Series 2019 Project or to pay the Debt Service Payments on the Series 2019 Bonds to the extent there are insufficient funds on deposit in the Bond Fund, the Redemption Fund, the Surplus Fund (including the Restricted Account of the Surplus Fund) and the Operations Contingency Fund available on the date such payments are due. Within the Repair and Replacement Fund, the Trustee will establish a separate Parking Facility Account (the “Parking Facility Account”) from which the Trustee may withdraw funds for the costs of maintenance and repair of the Parking Facility or to the extent Net Proceeds are insufficient for such purposes, to the costs of restoration or replacement of the Series 2019 Project or to pay the Debt Service Payments on the Series 2019 Bonds to the extent there are insufficient funds on deposit in the Bond Fund, the Redemption Fund, the Surplus Fund (including the Restricted Account of the Surplus Fund) and the Operations Contingency Fund available on the date such payments are due. The Indenture and the Loan Agreement will identify, with respect to the Student Housing Facilities, or, if applicable, the Parking Facility, an amount of money to be deposited in each Annual Period to the Repair and Replacement Fund or, if applicable, the Parking Facility Account therein (the “Repair and Replacement Fund Requirement”). The Repair and Replacement Fund Requirement will be adjusted upwards or downwards by the amounts recommended in the latest Periodic Project Assessment for each Student Housing Facility and the Parking Facility, and upwards by amounts otherwise approved by the Borrower and the University.

The Borrower and the University have entered into the Parking Facility Lease with respect to the Parking Facility. Notwithstanding anything contained herein, so long as the Parking Facility Lease is in effect, the University shall be solely responsible for all necessary and proper repairs, renewals and replacements to the Parking Facility, including external and structural repairs, renewals and replacements. In the event that the Periodic Project Assessment requires deposits to the Parking Facility Account of the Repair and Replacement Fund, such amounts will be available to the Borrower to make capital repairs and replacements to the Parking Facility, or, while the Parking Facility Lease or any renewal thereof is in effect, to the University, upon requisition of the Borrower (as provided in the Indenture) to make such repairs and replacements.

Operations Contingency Fund. The Indenture creates an Operations Contingency Fund which will be funded after the disbursements described in (a) through (h) under the heading “Revenue Fund” above are made. Amounts held in the Operations Contingency Fund will be available to the Trustee on a monthly basis to make the monthly credits or deposits required from the Revenue Fund.

Money in the Operations Contingency Fund may be used to pay Expenses of, or to make capital expenditures or repairs and replacements in respect of, the Series 2019 Project, which are not included in the Annual Budget (provided, the University, as Manager, determines, and certifies in writing to the Trustee that, after payment of such Expenses or such capital expenditures or repairs and replacements, there are sufficient funds in the Bond Fund, the Revenue Fund and the Operations Contingency Fund to pay the Debt Service Payments coming during on the next succeeding Bond Payment Date).

Money in the Operations Contingency Fund may also be used to pay Debt Service Payments to the extent that there are insufficient funds in the Revenue Fund, the Bond Fund, the Redemption Fund and the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund).

So long as no liabilities or obligations of the Borrower, whether budgeted or unbudgeted, are due and unpaid as of June 30 of each Annual Period, the Trustee will, within five Business Days after such June 30, (i) retain an amount equal to 25% of the aggregate Expenses reflected in the Annual Budget for the following Annual Period in the Operations Contingency Fund and (ii) transfer all amounts remaining in the Operations Contingency Fund in excess of the amount described in (i) to the Surplus Fund.

Surplus Fund. The Indenture creates a Surplus Fund that will be funded from amounts in the Operations Contingency Fund as directed above under “Operations Contingency Fund.” Within the Surplus Fund, there is created a separate account to be designated the “Restricted Account.”

Provided (i) no Event of Default has occurred and is then continuing, (ii) all amounts withdrawn from the Repair and Replacement Fund to pay Debt Service Payments on the Bonds in accordance with the Indenture are reimbursed in full, (iii) all amounts required to restore the Debt Service Reserve Fund to the Debt Service Reserve Requirement are paid in full, and (iv) all amounts for any unbudgeted operating expenses, capital expenditures or repair and replacement of Equipment or other components of the Project that have been incurred for the Project and are then due and owing have been paid in full, on receipt by the Trustee of the annual financial statements and Audit Report for the most recently ended Annual Period, the Trustee shall transfer all amounts in the Surplus Fund (including any amounts in the Restricted Account of the Surplus Fund) pursuant to the following paragraph.

Money in the Surplus Fund (including the Restricted Account of the Surplus Fund) may also be used to make the transfers and deposits required to be made from the Revenue Fund, and the Authority has authorized and directed the Trustee to withdraw funds from the Surplus Fund to make such transfers and deposits to the extent that there are insufficient funds in the Revenue Fund, the Bond Fund, and the Redemption Fund available therefor on such date.

After any transfers pursuant to the immediately preceding paragraph are made, if the annual financial statements, Audit Report, and accompanying calculation indicate a Fixed Charges Coverage Ratio of at least 1.20, pursuant to written instructions provided to the Trustee by the Borrower and approved by the University, the Trustee will transfer (1) to the Secondary Reserve Account, all amounts in the Surplus Fund (including any amounts in the Restricted Account of the Surplus Fund) up to the amount indicated in the Annual Budget for the preceding year as the amount to be transferred to the Secondary Reserve Account to pay Subordinated Expenses, and (2) all remaining amounts in the Surplus Fund (including any amounts in the Restricted Account of the Surplus Fund) to the Borrower for payment of rent due to the University as required by the terms of the Ground Lease; provided, however, the Trustee will not make the initial transfer of any money on deposit in the Surplus Fund until the Borrower has certified that the Student Housing Facilities have a Fixed Charges Coverage Ratio of at least 1.20, commencing in the Annual Period in which the Completion Date occurs.

To the extent any amounts in the Surplus Fund may not be transferred or distributed pursuant to the previous paragraphs, all such amounts shall be transferred to the Restricted Account of the Surplus Fund and will remain therein until such time as (i) the Borrower demonstrates, by the delivery of annual financial statements, an Audit Report, and an accompanying calculation, a Fixed Charges Coverage Ratio of at least 1.20, or (ii) such funds are otherwise applied in accordance with the Indenture.

Secondary Reserve Fund. The Indenture creates a Secondary Reserve Fund that will be funded from deposits described herein. The Secondary Reserve Fund is not part of the Trust Estate and is not subject to the lien of the Indenture. Money in the Secondary Reserve Fund may be disbursed to the University and used to pay Subordinated Expenses of the University relating to the Series 2019 Projects.

TITLE AND PROPERTY INSURANCE

An ALTA leasehold mortgagee’s title insurance policy will be delivered in the amount of not less than the original principal amount of the Series 2019 Bonds to insure that the Trustee will have a valid first security title in and to the Borrower’s leasehold interest in and to the Property, subject only to Permitted Encumbrances and the standard exclusions from the coverage of such policy. Under such title insurance policy, the Trustee will not be permitted to recover more than the fair market value of any property that is lost as a result of a title defect. The Borrower will be required under the terms of the Loan Agreement to keep Building 100 and the Parking Facility fully insured against fire and other casualties and to maintain certain specified amounts of liability and business interruption insurance. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - The Loan Agreement -- Insurance” in Appendix D hereto.

RATE COVENANT

In the Loan Agreement, the Borrower agrees to operate the Parking Facility as a revenue producing parking garage (either through the charging of rent to the University under the Parking Facility Lease, or, in the event the Parking Facility Lease is no longer in effect, by charging students, faculty and other users of the Parking Facility for the use thereof), and Building 100 as a revenue producing student housing facility (along with related facilities), and to the extent permitted by law and pursuant to the terms and conditions of the Ground Lease, to charge such fees and rates for its facilities and services and to exercise such skill and diligence as will provide Revenue Available for Fixed Charges, together with other available funds, sufficient to pay promptly all expenses of operation, maintenance, and repair of the Series 2019 Project and to provide all payments required to be made by the Borrower under the Loan Agreement. Such rates, fees, and charges in each Annual Period beginning with the Annual Period in which the 2019 Completion Date occurs, will be required to be sufficient to produce a Fixed Charges Coverage Ratio of at least 1.20. In the event that it is determined, based on the annual audited financial statements of the Borrower required by the provisions of the Loan Agreement described in Appendix D attached hereto under the heading “THE LOAN AGREEMENT - FINANCIAL STATEMENTS,” that for any Annual Period, such Fixed Charges Coverage Ratio has not been maintained, the Borrower agrees that it will, within 30 days of receipt of such financial statements, engage a Financial Consultant to submit a report to the Borrower, the Trustee and the Series 2019 Bond Insurer containing recommendations as to changes in the operating policies of the Borrower designed to maintain such Fixed Charges Coverage Ratio, will cause such Financial Consultant to prepare and submit such recommendations within 60 days the date of its engagement and will promptly implement such recommendations to the extent permitted by law and by the terms and conditions of the Ground Lease and the Parking Facility Lease. So long as (i) the Fixed Charges Coverage Ratio does not fall below 1.00 and (ii) the Financial Consultant’s recommendations are followed, no Event of Default will occur; however, the Borrower is obligated to employ the Financial Consultant for such purpose until such rates, fees, and charges produce a Fixed Charges Coverage Ratio of at least 1.20 during the then current Annual Period.

The Borrower will also be required, from time to time as often as necessary, to the extent permitted by law and pursuant to the terms and conditions of the Ground Lease and the Parking Facility Lease, to revise the rates, fees, and charges aforesaid in such manner as may be necessary or proper so that the Revenue Available for Fixed Charges will be sufficient to meet the requirements of the Loan Agreement, and will take all action within its power to obtain approvals of any regulatory or supervisory authority to implement any rates, fees, and charges required by the Loan Agreement. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS – The Loan Agreement - Financial Covenants -- Rate Covenant” in Appendix D attached hereto.

ANNUAL BUDGET

At least 30 days prior to the first day of each Annual Period commencing with the Annual Period ended June 30, 2021, the Borrower will prepare the Annual Budget for the immediately succeeding Annual Period which will include the monthly budgeted Expenses of the Series 2019 Project for such Annual Period. If the Borrower fails to prepare the Annual Budget for any Annual Period, the Annual Budget for the immediately preceding Annual Period will continue in effect until the Annual Budget is be prepared for the remainder of the applicable Annual Period. To the extent that the Borrower deems it necessary at any time during any Annual Period, the Borrower may submit a revised Annual Budget to the Authority, the Trustee, the Series 2019 Bond Insurer and the University declaring that the revisions are necessary to operate or maintain the Series 2019 Project and setting forth the reasons therefor, which revised Annual Budget will, for all purposes of the Loan Agreement, be deemed the Annual Budget for the remainder of the applicable Annual Period. The Annual Budget or revised Annual Budget will be accompanied by a certificate of the Borrower to the effect that the Fixed Charges Coverage Ratio for the Annual Period to which such Annual Budget relates, based on the projected Revenues and Expenses set forth therein, will not be less than 1.20.

COVENANT REGARDING MANAGER

The Borrower agrees that if the University, as the initial Manager ceases to serve as Manager, the Borrower will promptly employ, and at all times thereafter employ, as the Manager a recognized manager of student housing facilities acceptable to the Ground Lessor and the Series 2019 Bond Insurer that then manages, and will have for the past five years managed, at least 5,000 beds of student housing. Prior to entering into a contract with any successor Manager, such contract is subject to the prior written consent of the Series 2019 Bonds Insurer and the Borrower will first deliver to the Trustee a Favorable Opinion of Bond Counsel.

ENFORCEABILITY OF REMEDIES

The realization of value from the real and personal property comprising the Series 2019 Project and from the other security for the Series 2019 Bonds upon any default will depend upon the exercise of various remedies specified by the Bond Documents. These and other remedies may require judicial actions, which are often subject to discretion and delay and which may be difficult to pursue. See “CERTAIN BONDHOLDERS’ RISKS – Limitations on Enforceability of Remedies” and “- PLEDGE AND ASSIGNMENT OF, AND GRANT OF SECURITY INTEREST IN, FUTURE REVENUES” herein.

ADDITIONAL BONDS AND INDEBTEDNESS

So long as there is no Event of Default existing under the Indenture (or so long as such Event of Default will be cured upon the issuance of the Additional Bonds), Additional Bonds may be issued pursuant to the Indenture by the Authority upon the written request of the Borrower to provide funds to pay any one or more of the following: (i) the costs of completing the Series 2019 Project or any additional project (collectively, the “Project”); (ii) the costs of making such additions or alterations as the Borrower may deem necessary or desirable and as will not impair the nature of the particular Project as a parking facility or a student housing facility (or incidental facilities associated with student housing facilities) and as will be located on the Property, together with the Related Improvements; (iii) the costs of refunding any Bonds; (iv) the costs of the acquisition, equipping, and construction of additional property and housing (including related buildings and ancillary facilities and Related Improvements) to be utilized for the benefit of the University, including the acquisition of equipment and real property; and (v) in each of the foregoing cases, the costs of the issuance and sale of the Additional Bonds and capitalized or funded interest for such period and such other costs reasonably related to the financing as are agreed upon by the Borrower and the Authority. Such Additional Bonds will be issued on a parity with the Series 2019 Bonds and any Additional Bonds theretofore or thereafter issued, will be secured by the lien and security interests

granted by the Leasehold Deed of Trust and the Security Agreement, equally and ratably with the Series 2019 Bonds and any Additional Bonds theretofore or thereafter issued, and will be payable from the Bond Fund and the Redemption Fund. An amount equal to the Debt Service Reserve Requirement for such Additional Bonds is required to be deposited into a separate Account of the Debt Service Reserve Fund or, if provided for in a supplemental indenture, into the Account established under the Indenture for the Series 2019 Bonds, in which case, the Account is required to be a shared Account benefitting the Series 2019 Bonds and any Additional Bonds identified in such supplemental indenture.

Such Additional Bonds may be issued in such series and principal amounts, will be dated, will bear interest at such rate or rates, will be subject to redemption at such times and prices and will mature in such years as the supplemental indenture authorizing the issuance thereof will fix and determine and will be authenticated as provided in the Indenture.

The Series 2019 Bonds and any other Additional Bonds issued under the Indenture are referred to herein collectively as the “Bonds.”

Except to provide funds to pay the costs of completing a Project (including in each case, the costs of issuance and sale of the Additional Bonds, capitalized or funded interest, the cost of funding a debt service reserve fund and such other costs reasonably related to the financing as agreed upon by the Borrower and the Authority), and as provided below, the Borrower may not incur any additional Indebtedness without evidence in the form of a Financial Consultant’s report that (i) the Fixed Charges Coverage Ratio for the most recent Annual Period prior to the incurrence of such additional Indebtedness was at least 1.20, (ii) the projected Fixed Charges Coverage Ratio for the first two full Annual Periods immediately succeeding completion of the financed additions or improvements to the particular Project by such additional Indebtedness would be at least 1.20 (including the proposed additional Indebtedness), and (iii) to the extent applicable, the occupancy of Building 100 was at least 95% in the preceding Annual Period. Notwithstanding the foregoing sentence, and without regard to the historical Fixed Charges Coverage Ratio referenced in the preceding clause (i) or the occupancy requirement referenced in the preceding clause (iii), the Borrower may incur additional Indebtedness securing Additional Bonds issued by the Authority (including in each case, the costs of issuance and sale of the Additional Bonds, capitalized or funded interest, the cost of funding a debt service reserve fund and such other costs reasonably related to the financing as agreed upon by the Borrower and the Authority) related to the acquisition, equipping and construction of additional property and housing (including related buildings and ancillary facilities) to be utilized for the benefit of the University, including the acquisition of equipment and real property, upon the delivery of evidence in the form of a Financial Consultant’s report that the projected Fixed Charges Coverage Ratio for the first three full Annual Periods immediately succeeding completion of such additional property and housing would be at least 1.20 (including the proposed additional Indebtedness and the outstanding Indebtedness).

Prior to issuing any Additional Bonds, other than refunding bonds contemplated above, the Borrower is required to obtain the consent of any Bond Insurer associated with any Series or Subseries of Outstanding Bonds, as applicable.

Notwithstanding anything else contained in the Indenture and the Loan Agreement, the Borrower is authorized to incur additional Indebtedness in the form of capital leases for the acquisition of equipment and other personal property for the benefit of a Project, provided that such amount is included in the Annual Budget.

Such Additional Bonds will be issued in such Series, Subseries, and principal amounts, will be dated, will bear interest at such rate or rates, will be subject to redemption at such times and prices, and will mature in such years as the supplemental indenture authorizing the issuance thereof shall fix and determine and will be deposited with the Trustee for authentication and delivery.

SERIES 2019 BOND INSURER CONTROL

Anything in the Indenture to the contrary notwithstanding, and so long as the Series 2019 Bond Insurance Policy is in effect and no Series 2019 Bond Insurer Default (as defined in the Indenture) exists with respect to the Series 2019 Bond Insurance Policy, any request, demand, authorization, direction, notice, consent, waiver, or other action provided in the Indenture to be given or taken by the Owners of Series 2019 Bonds and any right of the Owners of the Series 2019 Bonds to direct, consent to, or waive the exercise by the Trustee of any right or remedy under the Indenture (except in respect of certain amendments requiring the approval of all Owners or the Owners particularly affected) may be given or taken by, and only by, a written instrument signed by the Series 2019 Bond Insurer on behalf of such Owners.

In accordance with the Indenture and each Series 2019 Bond, each Owner of the Series 2019 Bonds appoints the Series 2019 Bond Insurer as its agent and attorney-in-fact with respect to the Series 2019 Bonds and agrees that the Series 2019 Bond Insurer may at any time during the continuation of any Insolvency Proceeding (as defined in the Indenture) direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim or enforcement proceeding in connection with an Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedeas or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, each Holder of the Series 2019 Bonds delegates and assigns to the Series 2019 Bond Insurer, to the fullest extent permitted by law, the rights of each Holder of the Series 2019 Bonds in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding.

BOND INSURANCE

The following information has been supplied by the Series 2019 Bond Insurer for inclusion in this Official Statement. No representation is made by the Authority or the Underwriter as to the accuracy or completeness of the information.

SERIES 2019 BOND INSURANCE POLICY

Concurrently with the issuance of the Series 2019 Bonds, Assured Guaranty Municipal Corp. (the “Series 2019 Bond Insurer”) will issue the Series 2019 Bond Insurance Policy. The Series 2019 Bond Insurance Policy guarantees the scheduled payment of principal of and interest on the Series 2019 Bonds when due as set forth in the form of the Series 2019 Bond Insurance Policy included as Appendix H to this Official Statement.

The Series 2019 Bond Insurance Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.

THE SERIES 2019 BOND INSURER

The Series 2019 Bond Insurer is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd. (“AGL”), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol “AGO”. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. Neither AGL nor any of its shareholders or affiliates, other than the Series 2019 Bond Insurer, is obligated to pay any debts of the Series 2019 Bond Insurer or any claims under any insurance policy issued by the Series 2019 Bond Insurer.

The Series 2019 Bond Insurer’s financial strength is rated “AA” (stable outlook) by S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”), “AA+” (stable outlook) by Kroll Bond Rating Agency, Inc. (“KBRA”) and “A2” (stable outlook) by Moody’s Investors Service, Inc. (“Moody’s”). Each rating of the Series 2019 Bond Insurer should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of the Series 2019 Bond Insurer in its sole discretion. In addition, the rating agencies may at any time change the Series 2019 Bond Insurer’s long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by the Series 2019 Bond Insurer. The Series 2019 Bond Insurer only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by the Series 2019 Bond Insurer on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn.

Current Financial Strength Ratings

On December 21, 2018, KBRA announced it had affirmed the Series 2019 Bond Insurer’s insurance financial strength rating of “AA+” (stable outlook). The Series 2019 Bond Insurer can give no assurance as to any further ratings action that KBRA may take.

On June 26, 2018, S&P announced it had affirmed the Series 2019 Bond Insurer’s financial strength rating of “AA” (stable outlook). The Series 2019 Bond Insurer can give no assurance as to any further ratings action that S&P may take.

On May 7, 2018, Moody’s announced it had affirmed the Series 2019 Bond Insurer’s insurance financial strength rating of “A2” (stable outlook). The Series 2019 Bond Insurer can give no assurance as to any further ratings action that Moody’s may take.

For more information regarding the Series 2019 Bond Insurer’s financial strength ratings and the risks relating thereto, see AGL’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Capitalization of the Series 2019 Bond Insurer

At September 30, 2018:

 The policyholders’ surplus of the Series 2019 Bond Insurer was approximately $2,203 million.

 The contingency reserves of the Series 2019 Bond Insurer and its indirect subsidiary Municipal Assurance Corp. (“MAC”) (as described below) were approximately $1,187 million. Such amount includes 100% of the Series 2019 Bond Insurer’s contingency reserve and 60.7% of MAC’s contingency reserve.

 The net unearned premium reserves and net deferred ceding commission income of the Series 2019 Bond Insurer and its subsidiaries (as described below) were approximately $1,863 million. Such amount includes (i) 100% of the net unearned premium reserve and deferred ceding commission income of the Series 2019 Bond Insurer, (ii) the consolidated net unearned premium reserves and net deferred ceding commissions of the Series 2019 Bond Insurer’s wholly owned subsidiary Assured Guaranty (Europe) plc (“AGE”), and (iii) 60.7% of the net unearned premium reserve of MAC.

The policyholders’ surplus of the Series 2019 Bond Insurer and the contingency reserves, net unearned premium reserves and deferred ceding commission income of the Series 2019 Bond Insurer and MAC were determined in accordance with statutory accounting principles. The net unearned premium reserves and net deferred ceding commissions of AGE were determined in accordance with accounting principles generally accepted in the United States of America.

Incorporation of Certain Documents by Reference

Portions of the following documents filed by AGL with the Securities and Exchange Commission (the “SEC”) that relate to the Series 2019 Bond Insurer are incorporated by reference into this Official Statement and shall be deemed to be a part hereof:

(i) the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (filed by AGL with the SEC on February 23, 2018);

(ii) the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (filed by AGL with the SEC on May 4, 2018);

(iii) the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 (filed by AGL with the SEC on August 2, 2018); and

(iv) the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 (filed by AGL with the SEC on November 9, 2018).

All consolidated financial statements of the Series 2019 Bond Insurer and all other information relating to the Series 2019 Bond Insurer included in, or as exhibits to, documents filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding Current Reports or portions thereof “furnished” under Item 2.02 or Item 7.01 of Form 8-K, after the filing of the last document referred to above and before the termination of the offering of the Series 2019 Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC’s website at http://www.sec.gov, at AGL’s website at http://www.assuredguaranty.com, or will be provided upon request to Assured Guaranty Municipal Corp.: 1633 Broadway, New York, New York 10019, Attention: Communications Department (telephone (212) 974-0100). Except for the information referred to above, no information available on or through AGL’s website shall be deemed to be part of or incorporated in this Official Statement.

Any information regarding the Series 2019 Bond Insurer included herein under the caption “BOND INSURANCE – THE SERIES 2019 BOND INSURER” or included in a document incorporated by reference herein (collectively, the “Series 2019 Bond Insurer Information”) shall be modified or superseded to the extent that any subsequently included the Series 2019 Bond Insurer Information (either directly or through incorporation by reference) modifies or supersedes such previously included the Series 2019 Bond Insurer Information. Any Series 2019 Bond Insurer Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded.

Miscellaneous Matters

The Series 2019 Bond Insurer makes no representation regarding the Series 2019 Bonds or the advisability of investing in the Series 2019 Bonds. In addition, the Series 2019 Bond Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Series 2019 Bond Insurer supplied by the Series 2019 Bond Insurer and presented under the heading “BOND INSURANCE” and in Appendix H – SPECIMEN MUNICIPAL BOND INSURANCE POLICY.

CASH FLOW PROJECTION

Attached hereto as Appendix B is a Cash Flow Projection (the “Cash Flow Projection”) relating to the Series 2019 Project’s ability to generate revenues from operations sufficient to pay principal of and interest on the Series 2019 Bonds for each of the years ending June 30, 2021 through 2025. The Cash Flow Projection has not been reviewed, compiled or examined by an accountant. The Underwriter makes no representation for the accuracy of the Cash Flow Projection. The Cash Flow Projection has been updated from that provided in the Preliminary Official Statement to reflect final pricing. Bond proceeds will be deposited in the appropriate funds as summarized in the “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Rental Revenues estimated in the Cash Flow Forecast are based on rents for each bed presented herein under the heading “THE UNIVERSITY HOUSING MASTER PLAN.” The Cash Flow Forecast assumes delivery of the Parking Facility in August 2019 and Building 100 in August 2020, with assumed occupancy rates for available beds of 95% during the academic year. Other revenues include income from summer camps and conferences and other ancillary income, as well as earnings on the portion of the Debt Service Reserve Fund funded from bond proceeds at an assumed annual rate of 2.50%. In addition, the University will make annual lease payments to the Borrower pursuant to the Parking Facility Lease.

In addition to regular estimated costs of operating the Series 2019 Project, the Cash Flow Forecast includes an annual deposit to the Repair and Replacement Fund equal to approximately $219 per bed per year, commencing in the fiscal year ending June 30, 2021 and an retained balance in the Operations Contingency Fund of 25% of the senior operating expenses reflected in the Annual Budget each year. A portion of the services required to operate the Series 2019 Project will be provided by the University pursuant to the Ground Lease, the cost of which will be reimbursed to the University from balances in the Surplus Fund that are available to be released. Available balances for release from the Surplus Fund will also be used to make deposits to the Secondary Reserve Fund, equal to approximately $109 per bed per year. Income and expense estimates (including the annual Repair and Replacement Fund deposit and Secondary Reserve Fund Deposit) are escalated at an assumed rate of 3% per annum.

The achievement of any financial projection is dependent upon future events, the occurrence of which cannot be assured. Therefore, the actual results achieved may vary from the Cash Flow Projection. Such variation could be material. See “CERTAIN BONDHOLDERS’ RISKS - ACTUAL RESULTS MAY DIFFER FROM MARKET STUDIES AND CASH FLOW PROJECTION” and “- FORWARD LOOKING STATEMENTS.”

MARKET STUDIES

Attached hereto as Appendix A are student housing market studies (the “Market Studies”) prepared by B&D and MGT. The intentions of the Market Studies were to evaluate potential demand for additional on-campus student housing at the University. The Market Studies identified a sample of six major apartment properties located off-campus but near the University. The rental rates for the competing properties vary as did the amenities provided by the competing properties. The Market Studies concluded that there is demand for over 2,000 new student housing beds and also concluded that the rental rates proposed to be charged at the Series 2019 Project are competitive with the major off-campus apartment properties located in the area. See “MARKET STUDIES” in Appendix A hereto.

CERTAIN BONDHOLDERS’ RISKS

INTRODUCTION

No person should purchase any of the Series 2019 Bonds without carefully reviewing the following information, which summarizes some, but not all, of the factors that should be carefully considered prior to such a purchase. Each prospective purchaser should also carefully examine this Official Statement and his, her, or its own financial condition (including the diversification of his, her, or its investment portfolio) in order to make a judgment as to whether the Series 2019 Bonds are an appropriate investment.

Identified and summarized below are a number of considerations or risks that could adversely affect the operation of the Series 2019 Project and/or the Series 2019 Bonds and that should be considered by prospective purchasers. The following discussion is not intended to be exhaustive, but includes certain major factors that should be considered along with other factors set forth elsewhere in this Official Statement, including the Appendices hereto.

GENERAL RISK FACTORS

Payment of the principal of and interest on the Series 2019 Bonds will depend on the ability of the Borrower to generate sufficient Revenues to pay such debt service on the Series 2019 Bonds and any other indebtedness while paying Expenses in connection with the Series 2019 Project. The ability of the Borrower to construct and lease up and maintain occupancy of Building 100 and the Parking Facility sufficient to generate necessary Revenues may be adversely affected by unforeseen events and conditions, lack of or changes in demand for Building 100 and the Parking Facility or the University, competition with other housing options or fluctuations in public confidence in the University. No representation or assurances can be made that the receipts derived from the operation of the Series 2019 Project, as presently estimated or otherwise, will be realized in amounts necessary to pay Debt Service Payments on the Series 2019 Bonds as well as the Expenses of the Series 2019 Project.

The following are some of the factors that may affect the development, construction, operations and economic well-being of the Borrower and should be considered by prospective purchasers. The following discussion is not intended to be exhaustive, but includes certain significant factors that should be considered along with other factors set forth elsewhere in this Official Statement, including the appendices hereto. The order of inclusion of these risks and other investment considerations is not intended to be representative of the importance or probability of such risks or investment considerations. In order for prospective purchasers of the Series 2019 Bonds to identify risk factors and make an informed investment decision, prospective purchasers should be thoroughly familiar with this entire Official Statement and the appendices hereto so as to make a judgment as to whether the Series 2019 Bonds are an appropriate investment. Prospective investors should obtain such additional information as they deem advisable in connection with their evaluation of the suitability of the Series 2019 Bonds for investment.

LIMITED OBLIGATIONS OF THE AUTHORITY

The Series 2019 Bonds constitute limited obligations of the Authority and have three potential sources of payment. The sources of payment are as follows:

Loan Payments received by the Trustee from the Borrower pursuant to the terms of the Indenture and the Loan Agreement.

The Authority has no obligation to pay the Series 2019 Bonds except from the related Trust Estate, including Basic Loan Payments derived from the Loan Agreement. See Appendix C for the definition of “Trust Estate.” The Series 2019 Bonds, together with interest and premium, if any, thereon, will not be or constitute general obligations or indebtedness of any Member, any Sponsor, the State of North Carolina or any political subdivision thereof, the Project Jurisdiction, or any political subdivision approving the issuance of the Series 2019 Bonds, or the University, but will be special limited obligations of the Authority. Neither the faith and credit nor the taxing power of any Member, any Sponsor, the State of North Carolina or any political subdivision thereof, the Project Jurisdiction, or any political subdivision approving the issuance of the Series 2019 Bonds, nor the faith and credit of the Authority is pledged to the payment of the Debt Service Payments on the Series 2019 Bonds, and the owners of the Series 2019 Bonds, will not have the right to compel any exercise of the taxing power of any Member, any Sponsor, the State of Wisconsin or any political subdivision thereof, the State of North Carolina or any political subdivision thereof, the Project Jurisdiction, or the University to pay the Series 2019 Bonds, any premium thereon, or the interest thereon. The Authority has no taxing power. The Borrower will be required to make Basic Loan Payments (the interest in which the Trustee has received by assignment from the Authority) to the Trustee in amounts sufficient to enable the Trustee to pay the Debt Service Payments on the Series 2019 Bonds. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - THE INDENTURE -- Bond Fund” in Appendix D hereto. The Basic Loan Payments will be derived solely from operation of the Series 2019 Project. Furthermore, the Borrower’s ability to meet its obligations under the Loan Agreement will depend upon achieving and maintaining certain occupancy levels at Building 100 and receipt of sufficient rental payments from the University (or from operations thereof) from the Parking Facility throughout the term of the Series 2019 Bonds. No assurance can be made that the Borrower will generate sufficient Revenues from the Series 2019 Project to pay Debt Service Payments on the Series 2019 Bonds after payment of Expenses of the Series 2019 Project.

Revenues received from operation of the Series 2019 Project by a receiver upon a default under the Indenture.

It has been the experience of lenders in recent years that attempts to have a receiver appointed to take charge of properties with respect to which loans have been made are frequently met with defensive measures such as the initiation of protracted litigation and the initiation of bankruptcy proceedings. Such defensive measures can prevent the appointment of a receiver or greatly increase the expense and time involved in having a receiver appointed. See “CERTAIN BONDHOLDERS’ RISKS - ENFORCEABILITY OF REMEDIES” herein. Accordingly, prospects for uninterrupted payment of principal and interest on the Series 2019 Bonds in accordance with their terms are largely dependent upon Basic Loan Payments from the Borrower described in the preceding paragraph, which are wholly dependent upon the success of the Borrower in the operation of the Series 2019 Project.

Proceeds realized from the sale or lease of the Borrower’s interest in Building 100 and the Parking Facility to a third party by the Trustee at or following foreclosure by the Trustee of the Leasehold Deed of Trust and proceeds realized from the liquidation of other security for the Series 2019 Bonds.

Debtors frequently employ defensive measures, such as protracted litigation and bankruptcy proceedings, in response to lenders’ efforts to foreclose on real property or otherwise to realize upon collateral to satisfy indebtedness that is in default. Such defensive measures can prevent, or greatly increase the expense and time involved in achieving, such foreclosure or other realization. In addition, the Trustee could experience difficulty in selling or leasing the real and personal property interest in Building 100 or the Parking Facility upon foreclosure due to the special purpose nature of a student housing facility and a parking garage, and the proceeds of such sale may not be sufficient to pay fully the owners of the Series 2019 Bonds. See “CERTAIN BONDHOLDERS’ RISKS - ENFORCEABILITY OF REMEDIES” herein. Accordingly, prospects for uninterrupted payment of principal and interest on the Series 2019 Bonds in accordance with their terms are largely dependent upon the Basic Loan Payments described in paragraph (1) above, which are wholly dependent upon the success of Building 100 and the Parking Facility. Even if Building 100 and the Parking Facility are operating in an efficient manner, other factors could affect the ability of the Borrower to make Basic Loan Payments under the Loan Agreement.

RISKS OF CONSTRUCTION

The cost of construction of the Series 2019 Project may be affected by factors beyond the control of the Borrower, including strikes, material shortages, adverse weather conditions, subcontractor defaults, delays, and unknown contingencies.

The Construction Agreement between the Developer and the General Contractor will obligate the General Contractor to complete the Series 2019 Project within a specified time for an amount equal to the cost of the work plus a fee, the sum of which shall not exceed a guaranteed maximum price. The Construction Agreement requires the General Contractor to furnish performance and payment bonds; however, there can be no assurance that the obligations of the surety under such bonds can be enforced without costly and time-consuming litigation.

To the extent that construction is delayed or halted due to acts of force majeure or eminent domain, neither the Authority, the University, the Borrower, nor the General Contractor will have any obligation to provide for such completion. In the event the Series 2019 Project is not completed, the only meaningful security for the owners of the Series 2019 Bonds would be the right to foreclose under the Leasehold Deed of Trust on the Borrower’s interest in the uncompleted Building 100 and the Parking Facility. While the Indenture permits the Authority to issue Additional Bonds to complete the Series 2019 Project, the Authority

is not obligated to issue such Additional Bonds and there can be no assurance that a purchaser for such Additional Bonds could be obtained.

In addition, the Borrower, based on advice of counsel and in accordance with the applicable laws of the State of North Carolina, expects to receive a rebate of certain sales taxes paid on construction materials. Such rebate payments are expected to be made twice a year by the applicable governmental entities and will be limited to paying costs of the Series 2019 Project or for future projects.

LIMITED RESOURCES

The Borrower has no substantial revenues or assets other than the Series 2019 Project. Furthermore, the Series 2019 Bonds are secured only by the operations of the Series 2019 Project and by the Borrower’s leasehold interest in Building 100 and the Parking Facility. Neither the University nor Beyond Owners Group is liable for the payment of the principal of, premium, if any, or interest on the Series 2019 Bonds nor shall the University be responsible or liable for any other obligations of the Borrower or the obligations of any other party other than themselves in connection with the Series 2019 Bonds. Therefore, timely payment of Debt Service Payments on the Series 2019 Notes will be dependent upon the Borrower’s ability to generate Revenues from the Series 2019 Project sufficient to pay its Expenses and such payments of principal of and premium, if any, and interest on the Series 2019 Notes. If Revenues are insufficient to pay the principal of and premium, if any, and interest on the Series 2019 Notes, the Borrower likely will have no moneys or assets other than the Series 2019 Project from which to make such payments.

FAILURE TO ACHIEVE AND MAINTAIN OCCUPANCY LEVELS AND RENTS

In order for the Borrower to generate sufficient Revenues to enable it to make the payments at the times required under the Loan Agreement, Building 100 must meet certain occupancy levels and achieve certain rents. There can be no assurance, however, that Building 100 will be able to meet and maintain such required levels. The economic feasibility of the Series 2019 Project and its ability to provide revenues to the Borrower sufficient to make payments on the Series 2019 Bonds depends on Building 100, when completed, achieving the forecasted level of occupancy and continuing to be substantially occupied by residents who are financially capable of paying the full amount of the rents.

The Borrower and the Manager have not done marketing efforts to date and have not secured any reservations for occupancy at Building 100. Fill up and occupancy of Building 100 may be affected by competition from existing facilities or from competing facilities either on the University campus or off the campus, including new facilities which the Borrower, the University, the Developer, the General Contractor, or its affiliates, may construct. If Building 100 fails to achieve significant initial occupancy and thereafter maintain significant occupancy, there may be insufficient funds to pay debt service on the Series 2019 Bonds. If actual operating experience is substantially different from the experience anticipated by the Borrower as of the date of this Official Statement, the revenues of the Borrower could be less than needed which could have a material adverse effect on the ability of the Borrower to pay debt service on the Series 2019 Bonds, the Series 2019 Notes and all other obligations.

REVENUES FROM OPERATION OF THE SERIES 2019 PROJECT

If the Borrower is unable to generate sufficient revenues from the operation of the Series 2019 Project to pay its operating expenses and principal of and interest on the Series 2019 Notes, an Event of Default will occur under the Bond Documents. Upon an Event of Default, the Series 2019 Bonds may not be paid or may be paid before maturity or applicable redemption dates and a forfeiture of redemption premiums may result. The Borrower’s ability to generate revenues and its overall financial condition may be adversely affected by a wide variety of future events and conditions including (i) a decline in the enrollment of the University, (ii) increased competition from other schools, (iii) increased competition from other housing

developments and options, (iv) increased competition from other parking facilities and options, (v) loss of accreditation of the University, (vi) failure to meet applicable federal guidelines or some other event that results in students being ineligible for federal financial aid, and (vii) cost overruns in connection with the Series 2019 Project or other capital improvements. The occupancy rates of Building 100 may be adversely affected by regional and local economic conditions, competitive conditions, local laws and regulations, and general real estate market conditions, including the supply, proximity, and amenities of apartment communities and parking options in the area.

DELINQUENT AND DEFAULTING TENANTS

The Borrower and the Manager only intend to rent units in Building 100 to tenants that it judges to be creditworthy. To the extent possible, management intends to terminate rentals to delinquent or defaulting tenants as soon as practicable after their default. Tenants who do not voluntarily vacate will require that the Borrower recover possession through legal action. Legal action is costly, both in regard to legal fees and expenses and to lost revenues during the time necessary to remove the tenant. The existence of delinquent or defaulting tenants in Building 100 could adversely affect the ability of the Borrower to make timely payments, if at all, under the Loan Agreement and the Series 2019 Notes. Any failure by the Borrower to satisfy its payment obligations under the Loan Agreement and the Series 2019 Notes will have an adverse impact on the ability of the Trustee to pay, from the Trust Estate, debt service payments on the Series 2019 Bonds.

RELIANCE ON THE UNIVERSITY, AS MANAGER

Marketing, start up and on-going management of Building 100 will be dependent on the efforts of the University as Manager of Building 100. The Borrower has retained the University to supervise the day- to-day marketing, operation and management of Building 100 and will be relying on the experience and expertise of the University, to supervise such operation and management.

If the Borrower were to terminate its relationship with the University, it would need to hire and train a successor management company for Building 100. No assurance can be given that the University can continue to successfully manage and operate Building 100, that the Borrower will not terminate the relationship with the University or that another experienced successor management company could be located or would be willing to undertake the management and operation of the student housing portion of the Series 2019 Project. A failure to maintain the University as the management company for Building 100 or to hire, train and retain a successor management company may have an adverse effect on ability of the Series 2019 Project to operate and could negatively impact occupancy levels and revenues of the Borrower.

COMPETITION

The student housing and the parking industries are both highly competitive. There are competitive housing communities and parking options both on University campus and in the nearby vicinity. Such competition may inhibit the extent to which the Borrower will be able to increase rates and charges and maintain or increase occupancy of Building 100 and the Parking Facility. Competing companies may offer newer or different projects, amenities, or services and thereby attract users who are current or potential users of Building 100 and the Parking Facility. Either the Developer or, under certain circumstances, the University may acquire or develop additional student housing or parking facilities that compete with Building 100 and the Parking Facility.

RELIANCE ON THE UNIVERSITY

Building 100 and the Parking Facility will be located on the campus of the University and will be constructed on Property leased by the Borrower pursuant to the Ground Lease. The Borrower expects all of

the residents of Building 100 and, likely, the majority of the users of the Parking Facility, to be students at the University. Therefore, the success of the Series 2019 Project is dependent on the University maintaining (i) adequate matriculation, (ii) a good reputation in the educational community and (iii) financial stability. If the University encounters difficulties with any of the matters listed in the previous sentence, such difficulties could decrease the desirability of Building 100 or the Parking Facility to existing or prospective users, which, in turn, could adversely affect the financial success of Building 100 and the Parking Facility and, in turn, cause a material adverse effect on the ability of the Borrower to pay debt service on the Series 2019 Bonds. No representation is made about the current financial position of the University or that the University might not encounter difficulties in the future.

RISKS OF REAL ESTATE INVESTMENT

Development, ownership and operation of real estate, such as the Series 2019 Project, involves certain risks, including the risk of adverse changes in general economic and local conditions (such as the possible future oversupply and lagging demand for rental housing for the aged), adverse use of adjacent or neighboring real estate, initial and continued community acceptance of the Series 2019 Project, increased competition from other student housing communities or parking facilities, changes in the cost of operation of the Series 2019 Project, difficulties or restrictions in the Borrower’s ability to raise rents charged, damage caused by adverse weather and delays in repairing such damage, student enrollment decreases, uninsured losses, failure of users to pay rent, operating deficits and mortgage foreclosure, lack of attractiveness of the Series 2019 Project to users and students, adverse changes in neighborhood values, and adverse changes in laws and regulations and real property tax rates. Such losses also include the possibility of fire or other casualty or condemnation.

Changes in general or local economic conditions and changes in interest rates and the availability of mortgage funding may render the sale or refinancing of the Series 2019 Project difficult or unattractive. These conditions may have an adverse effect on the demand for the Series 2019 Project as well as the market price received for the Series 2019 Project in the event of a sale or foreclosure of the Series 2019 Project. Many other factors may adversely affect the operation of the Series 2019 Project and cannot be determined at this time.

RISKS ASSOCIATED WITH THE GROUND LEASE

Neither the Authority nor the Borrower will have fee title to the Property. Instead, the Borrower will lease the Property from the University pursuant to the Ground Lease. The Borrower’s obligation to comply with the terms of the Ground Lease and to relinquish any claim to the Series 2019 Project upon the termination of the Ground Lease will likely render the Series 2019 Project less valuable to prospective purchasers upon foreclosure.

PROPERTY TAX EXEMPTION

The land on which the Series 2019 Project is located is exempt from property tax because it is owned by or on behalf of a constituent institution of the University of North Carolina. Building 100 and the Parking Facility are eligible for a property tax exemption. The Borrower has covenanted in the Loan Agreement to apply for such property tax exemption in January of the calendar year following the year in which such facilities are complete and placed in service; however, there can be no guaranty that such property tax exemption will be granted. In the event that the Borrower does not receive such property tax exemption or such property tax exemption is no longer available, such events could result in an additional liability of the Borrower with respect to Building 100 and the Parking Facility and increase the Expenses of the Borrower relating to the Series 2019 Project.

INSURANCE AND LEGAL PROCEEDINGS

The Borrower will carry insurance for the Series 2019 Project to insure against such risks as are customarily insured against with respect to the facilities of like size/type, as recommended by the Insurance Consultant. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - THE LOAN AGREEMENT -- Insurance” in Appendix D hereto. However, there can be no assurance that any current or future claims will be covered by or will not exceed applicable insurance coverage. No casualty will entitle the Borrower to any postponement, abatement, or diminution of the Basic Loan Payments. See “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - THE LOAN AGREEMENT -- Destruction and Damage” in Appendix D hereto.

Although the Borrower will be required to obtain and maintain certain insurance against damage or destruction as set forth in the Loan Agreement, there can be no assurance that the Series 2019 Project will not suffer losses for which insurance cannot be or has not been obtained or that the amount of any such loss, or the period during which the Series 2019 Project cannot generate Revenues, will not exceed the coverage of such insurance policies.

If the Series 2019 Project or any portion of the Series 2019 Project is damaged or destroyed, or is taken in a condemnation proceeding, funds derived from proceeds of insurance or any such condemnation award for the Series 2019 Project must be applied as provided in the Loan Agreement to restore or rebuild the Series 2019 Project or to redeem the Series 2019 Bonds. There can be no assurance that the amount of funds available to restore or rebuild the Series 2019 Project or to redeem the Series 2019 Bonds will be sufficient for that purpose, or that any remaining portion of the Series 2019 Project will generate Revenues sufficient to pay the expenses of the Series 2019 Project and the Borrower and the debt service on the Series 2019 Bonds remaining outstanding.

The Borrower has arranged for insurance coverage that is customary for student housing projects of a similar nature. In the event of damage or condemnation, the Borrower will rely on insurance proceeds and condemnation awards to pay all or part of the costs of restoring the Series 2019 Project. Failure of an insurer to pay a claim could result in a default on the Series 2019 Bonds and the Series 2019 Notes and redemption of such instruments at par. There are certain types of losses that are not insured or insurable, such as losses relating to certain types of water damage. Should such a catastrophic casualty occur, the Borrower would suffer a loss for which insurance benefits would not be available. Further, there is no assurance that insurance proceeds where available will be sufficient to repay the Series 2019 Bonds and the Series 2019 Notes.

BANKRUPTCY

Although the security under the Leasehold Deed of Trust and the lien on the Pledged Revenues under the Indenture given for the benefit of Owners of the Series 2019 Bonds are superior to the claims of other creditors (subject to the limitations set forth under “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2019 BONDS – PLEDGE OF PLEDGED REVENUES” above), bankruptcy and similar proceedings against the Borrower and usual equity principles may affect the enforcement of rights to such security. A court may invoke other equity principles to refuse to enforce specifically rights to such security. If such security is inadequate for payment in full of the Series 2019 Bonds and the Series 2019 Notes, bankruptcy proceedings and usual equity principles may also limit any attempt by the Trustee to seek payment from other property, if any, of the Borrower.

If the Borrower were to file a petition for relief under the United States Bankruptcy Code, the filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the Borrower, and any interest it has in property. If the bankruptcy court so orders, the Borrower’s

property, including its accounts receivable and proceeds thereof, could be used, at least temporarily, for the benefit of the bankruptcy estate despite the claims of its creditors.

In a case under the current United States Bankruptcy Code, a filing party could file a plan of reorganization. The plan is the vehicle for satisfying, and provides for the comprehensive treatment of, all claims against such filing party and could result in the modification of rights of any class of creditors, secured or unsecured. To confirm a plan of reorganization, with one exception discussed below, it must be approved by the vote of each class of impaired creditors. A class approves a plan if, of those who vote, those holding more than one-half in number and two-thirds in amount vote in favor of a plan. Approval by classes of interests requires a vote in favor of the plan by two-thirds in amount. If these levels of votes are attained, those voting against the plan or not voting at all are nonetheless bound by the terms thereof. Other than as provided in the confirmed plan, all claims and interests are discharged and extinguished. If fewer than all of the impaired classes accept the plan, the plan may nevertheless be confirmed by the bankruptcy court, and the dissenting claims and interests would be bound thereby. For this to occur, one of the impaired classes must vote to accept the plan and the bankruptcy court must determine that the plan does not “discriminate unfairly” and is “fair and equitable” with respect to the non-consenting class. A plan is fair and equitable if each class is treated in accordance with its credit priority and no class receives a distribution until senior classes are paid in full. The United States Bankruptcy Code establishes different fair and equitable tests for secured claims and interest holders. To be confirmed, the bankruptcy court must also determine that a plan, among other requirements, provides creditors with more than would be received in the event of liquidation, is proposed in good faith, and that the debtor’s performance is feasible.

Bankruptcy proceedings by the Borrower could adversely affect Beneficial Owners of the Series 2019 Bonds by reducing or delaying payments on the Series 2019 Bonds and may impede enforcement by the Trustee and such Owners of their claims to the collateral assigned and pledged to secure the Series 2019 Bonds. Federal bankruptcy law also permits adoption of a reorganization plan without the approval of such Owners if they are provided with the benefit of their original security or the “indubitable equivalent.” In addition, if a bankruptcy court concludes that such registered Owners have “adequate protection,” the court may (1) substitute other security for the security of the registered Owners and (2) subordinate the security of the registered Owners to (a) claims by persons supplying goods, services or credit to the Borrower after bankruptcy and (b) the administrative expenses of the bankruptcy proceeding. In the event of such bankruptcy, the amount realized by the registered Owners of the Series 2019 Bonds may depend on the court’s interpretation of “indubitable equivalent” and “adequate protection” under then existing circumstances. The effect of these and other provisions of federal bankruptcy law cannot be predicted and may be significantly affected by judicial interpretation.

Furthermore, recent judicial decisions concerning the status of debt service reserve funds held by an indenture trustee have concluded that such reserves are “cash collateral” of a debtor in bankruptcy and have cast doubt on the ability of the Trustee to use moneys in the Debt Service Reserve Fund to make payments on the Series 2019 Bonds in the event of a bankruptcy of a member of the Borrower.

LIMITATIONS ON ENFORCEABILITY OF REMEDIES

The Series 2019 Bonds are payable by the Authority from the Trust Estate, including payments to be made under the Loan Agreement and the Indenture. The payments to be made by the Borrower under the Loan Agreement are secured by a Leasehold Deed of Trust and other security instruments described herein. The practical realization of value upon any default will depend upon the exercise of various remedies specified by the Bond Documents. These and other remedies may, in many respects, require judicial actions, which are often subject to discretion and delay. Under existing law (including, particularly, federal bankruptcy law), the remedies specified by the Bond Documents may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in the Bond Documents. The various legal opinions to be delivered concurrently with the delivery of the Series 2019

Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by state and federal laws, rulings, and decisions affecting remedies, including judicial discretion in the application of the principles of equity, and by bankruptcy, reorganization, or other laws affecting the enforcement of creditors’ rights generally.

Any default in the performance of most of the covenants set forth in the Indenture, the Loan Agreement or the Leasehold Deed of Trust would constitute an Event of Default under such documents only following notice and lapse of time, as further described in “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS” in Appendix D hereto. The Bond Trustee may give notice of an Event of Default under the Indenture at any time in its discretion, but is not required to give such notice without the request of the Owners of at least 25% in aggregate principal amount of the Series 2019 Bonds outstanding under the Indenture. Events of Default specified by the Indenture can be remedied through enforcement action taken by the Trustee in its discretion or at the request of the Owners of not less than 25% in aggregate principal amount of the Series 2019 Bonds outstanding under the Indenture, subject to the right of the Owners of a majority in aggregate principal amount of Series 2019 Bonds then outstanding to direct all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture or any other proceedings thereunder.

Upon issuance of the Series 2019 Bonds, the Series 2019 Notes will constitute 100% of the Bonds outstanding under the Indenture. The Indenture permits the issuance of Additional Bonds under the circumstances specified therein. As a result, the proportion of the principal amount of the Series 2019 Bonds to the principal amount of all Bonds at any time outstanding under the Indenture is subject to change. Upon an acceleration of the Series 2019 Bonds, after paying the expenses and other amounts due to the Trustee, amounts available to pay the Series 2019 Bonds will be prorated among all Owners of Bonds without preference or priority of principal or premium over interest or of interest over principal or premium, or of any Series 2019 Bond over any other Series 2019 Bond.

POSSIBLE LIMITATIONS ON SECURITY

The pledge of and assignment by the Borrower of Pledged Revenues may be limited by the following: (a) statutory liens; (b) rights arising in favor of the United States of America or any agency thereof or the State or any agency thereof; (c) present or future prohibitions against assignment contained in any federal or state statutes or regulations; (d) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction; (e) federal bankruptcy or state insolvency laws affecting assignments of revenues earned after any effective institution of bankruptcy or insolvency proceedings by or against the Borrower; (f) rights of third parties in any revenues, including revenues converted to cash, not in possession of the Trustee; (g) the requirement that appropriate continuation statements be filed in accordance with the applicable Uniform Commercial Code; and (h) rights of holders of Permitted Encumbrances, as set forth in the Indenture. The priority of the Leasehold Deed of Trust may be limited or restricted by law and as otherwise provided by the Indenture.

BOND INSURANCE RISK FACTORS

In the event of default of the payment of principal or interest with respect to the Series 2019 Bonds when all or some becomes due, any owner of the Series 2019 Bonds shall have a claim under the Series 2019 Bond Insurance Policy for such payments. However, in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments are to be made in such amounts and at such times as such payments would have been due had there not been any such acceleration. The Series 2019 Bond Insurance Policy does not insure against redemption premium, if any. The payment of principal and interest in connection with mandatory or optional prepayment of the Series 2019 Bonds by the Issuer which is recovered by the Issuer from the bond owner as a voidable

preference under applicable bankruptcy law is covered by the insurance policy, however, such payments will be made by the Series 2019 Bond Insurer at such time and in such amounts as would have been due absence such prepayment by the Issuer unless the Series 2019 Bond Insurer chooses to pay such amounts at an earlier date.

Under most circumstances, default of payment of principal and interest does not obligate acceleration of the obligations of the Series 2019 Bond Insurer without appropriate consent. The Series 2019 Bond Insurer may direct and must consent to any remedies and the Series 2019 Bond Insurer’s consent may be required in connection with amendments to any applicable bond documents.

In the event the Series 2019 Bond Insurer is unable to make payment of principal and interest as such payments become due under the Series 2019 Bond Insurance Policy, the Series 2019 Bonds are payable solely from the moneys received pursuant to the applicable bond documents. In the event the Series 2019 Bond Insurer becomes obligated to make payments with respect to the Series 2019 Bonds, no assurance is given that such event will not adversely affect the market price of the Series 2019 Bonds or the marketability (liquidity) for the Series 2019 Bonds.

The long-term ratings on the Series 2019 Bonds are dependent in part on the financial strength of the Series 2019 Bond Insurer and its claim paying ability. The Series 2019 Bond Insurer’s financial strength and claims paying ability are predicated upon a number of factors which could change over time. No assurance is given that the long-term ratings of the Series 2019 Bond Insurer and of the ratings on the Series 2019 Bonds insured by the Series 2019 Bond Insurer will not be subject to downgrade and such event could adversely affect the market price of the Series 2019 Bonds or the marketability (liquidity) for the Series 2019 Bonds. See description of “RATINGS” herein.

The obligations of the Series 2019 Bond Insurer are general obligations of the Series 2019 Bond Insurer and in an event of default by the Series 2019 Bond Insurer, the remedies available may be limited by applicable bankruptcy law or other similar laws related to insolvency.

None of the Issuer, the Borrower, or Underwriter has made independent investigation into the claims paying ability of the Series 2019 Bond Insurer and no assurance or representation regarding the financial strength or projected financial strength of the Series 2019 Bond Insurer is given. Thus, when making an investment decision, potential investors should carefully consider the ability of the Authority to pay principal and interest on the Series 2019 Bonds and the claims paying ability of the Series 2019 Bond Insurer, particularly over the life of the investment. See “BOND INSURANCE” herein for further information provided by the Series 2019 Bond Insurer and the Series 2019 Bond Insurance Policy, which includes further instructions for obtaining current financial information concerning the Series 2019 Bond Insurer.

Anything in the Indenture to the contrary notwithstanding, and so long as the Series 2019 Bond Insurance Policy is in effect and no Series 2019 Bond Insurer Default (as defined in the Indenture) exists with respect to the Series 2019 Bond Insurance Policy, any request, demand, authorization, direction, notice, consent, waiver, or other action provided in the Indenture to be given or taken by the Owners of Series 2019 Bonds and any right of the Owners of the Series 2019 Bonds to direct, consent to, or waive the exercise by the Trustee of any right or remedy hereunder (except in respect of certain amendments requiring the approval of all Owners or the Owners particularly affected) may be given or taken by, and only by, a written instrument signed by the Series 2019 Bond Insurer on behalf of such Owners.

Insolvency Proceeding (a “Claim”), (B) the direction of any appeal of any order relating to any Claim, (C) the posting of any surety, supersedes or performance bond pending any such appeal, and (D) the right to vote to accept or reject any plan of adjustment. In addition, each Holder of the Series 2019 Bonds delegates and assigns to the Series 2019 Bond Insurer, to the fullest extent permitted by law, the rights of each Holder of the Series 2019 Bonds in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding.

LIMITED VALUE AT FORECLOSURE

The Series 2019 Project has been specifically designed and constructed as a student housing facility for the aged, and the Series 2019 Project may not be practically suited for other uses. The number of entities that could be expected to purchase or lease the Series 2019 Project is limited, and thus the ability of the Trustee to realize funds from the sale or rental of the Series 2019 Project upon an Event of Default under the Indenture may be limited. The value of the Series 2019 Project at foreclosure thereof may also be limited by alleged or actual rights of residents in such facilities and may be less than the principal amount of Series 2019 Bonds and other Bonds then outstanding. In addition, the Borrower has not secured an as-built appraisal in connection with the issuance of the Series 2019 Bonds. Therefore, there can be no assurance that the Series 2019 Project will maintain its value in the future.

ADDITIONAL BONDS

The Authority has the right to issue Additional Bonds under the Indenture that will be equally and ratably secured on a parity basis with the Series 2019 Bonds. See “ADDITIONAL BONDS” herein and “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS - THE INDENTURE -- Additional Bonds” in Appendix D hereto. Such Additional Bonds could dilute the security for the Series 2019 Bonds.

CLEAN-UP COSTS AND LIENS UNDER ENVIRONMENTAL STATUTES

The Developer retained an environmental engineer to conduct an environmental site assessment (the “Site Assessment”) of the Property. The Site Assessment did not reveal any evidence of recognized environmental conditions. Prospective purchasers of the Series 2019 Bonds may obtain a copy of the Site Assessment from the Underwriter; however, prospective purchasers of the Series 2019 Bonds may not rely upon the findings contained in the Site Assessment or upon any action or undertaking of the Developer in connection therewith.

The Borrower is not aware of any enforcement actions currently in process with respect to any releases of pollutants or contaminants at the Property. However, there can be no assurance that an enforcement action or actions will not be instituted under such statutes at a future date. In the event such enforcement actions were initiated, the Borrower could be liable for the costs of removing or otherwise treating pollutants or contaminants located at the Property. Furthermore, in determining whether to exercise any foreclosure rights with respect to the Series 2019 Project under the Indenture, the Trustee and the Bondholders would need to take into account the potential liability of any tenant of the Series 2019 Project, including a tenant by foreclosure, for clean-up costs with respect to such pollutants and contaminants.

PLEDGE AND ASSIGNMENT OF, AND GRANT OF SECURITY INTEREST IN, FUTURE REVENUES

Under the Security Agreement, the Borrower will, subject to only Permitted Encumbrances, pledge, assign and grant to the Trustee a security interest in (i) the Pledged Revenues, (ii) the Equipment, (iii) the Inventory, (iv) the Goods, (v) the Accounts, (vi) the General Intangibles, (vii) Instruments, Drafts, and Chattel Paper, (viii) the Documents of Title, (ix) the Contracts, (x) all guarantees of the Borrower’s existing and future Accounts and General Intangibles and all other security held by the Borrower for the payment or

satisfaction thereof and letter-of-credit rights in favor of the Borrower and other supporting obligations, (xi) Goods, the sale or lease of which gave rise to any Account or General Intangible of the Borrower, including any returned Goods, (xii) each deposit account of the Borrower or other account of the Borrower with the Trustee or any bank or financial institution and any other amounts which may be owing from time to time by any bank or financial institution to the Borrower, (xiii) all property of any nature whatsoever of the Borrower now or hereafter in the custody or possession of, or assigned or hypothecated to, the Trustee for any purpose, and (xiv) the Investment Property. Nevertheless, certain interests and claims of others may be on a parity with or prior to the pledge, assignment and grant made in the Loan Agreement, the Security Agreement, the Assignment of Contracts and in the Indenture and certain statutes and other provisions may limit the Borrower’s and the Authority’s rights to make such pledges, assignments, and/or grants of security interests. Examples of such claims, interests, and provisions are (1) statutory liens, (2) the North Carolina Uniform Commercial Code may not recognize a security interest in future revenues derived from the Series 2019 Project, (3) constructive trusts, equitable liens, or other rights impressed or conferred by any state or federal court in the exercise of its equitable jurisdiction, (4) federal bankruptcy laws as they affect amounts earned with respect to the Series 2019 Project after any effectual institution of bankruptcy proceedings by or against the Borrower or the Authority, (5) as to those items in which a security interest can be perfected only by possession, including items converted to cash, the rights of third parties in such items not in the possession of the Trustee, (6) items not in possession of the Trustee, the records to which are located or moved outside the State of North Carolina, which are thereby not subject to or are removed from the operation of North Carolina law, and (7) the requirement that appropriate continuation statements be filed in accordance with the North Carolina Uniform Commercial Code as from time to time in effect.

Moreover, it is unclear whether the covenant to deposit the proceeds of Pledged Revenues with the Trustee is enforceable. In light of the foregoing and of questions as to limitations on the effectiveness of the security interest granted in such Pledged Revenues, as described above, no opinion will be expressed by counsel to the Borrower as to enforceability of such covenant with respect to the required deposits.

RISK OF EARLY REDEMPTION

Purchasers of Series 2019 Bonds, including those who purchase Series 2019 Bonds at a price in excess of their principal amount or who hold such bonds trading at a price in excess of par, should consider the fact that the Series 2019 Bonds are subject to optional and mandatory redemption at a redemption price equal to their principal amount plus accrued interest upon the occurrence of certain events. This could occur, for example, in the event the Series 2019 Notes are prepaid as a result of a casualty or condemnation award affecting the Series 2019 Project or there is a default under the Leasehold Deed of Trust. See “THE SERIES 2019 BONDS – REDEMPTION.” Under such circumstances, a purchaser of the Series 2019 Bonds whose bonds are called for early redemption may not have the opportunity to hold such bonds for a time period consistent with such purchaser’s original investment intentions and may lose any premium paid for the Series 2019 Bonds.

ACTUAL RESULTS MAY DIFFER FROM MARKET STUDIES AND CASH FLOW PROJECTION

The Market Studies and their projection of future demands included as Appendix A hereto, and the Cash Flow Projection and its projection of future revenues and expenses with respect to the Series 2019 Project included as Appendix B hereto, are based upon assumptions concerning future events, circumstances, and transactions. The Market Studies should be read in their entirety. In addition, the Cash Flow Projection contained herein only covers the approximate five-year period ending June 30, 2025 and consequently does not cover the entire period during which the Series 2019 Bonds may be Outstanding. The achievement of any results of the Market Studies, the Cash Flow Projection, or other projection is dependent upon future events, the occurrence of which cannot be assured. Realization of the results projected will depend, among other things, on the implementation by the University of policies and procedures consistent with the assumptions. Future results will also be affected by events and circumstances beyond the control of

the Borrower. For the reasons described above, it is likely that the actual results of the Series 2019 Project will be different from the results projected in the Market Studies and the Cash Flow Projection included herein, and those differences may be material and adverse. Each of the Market Studies rely on many assumptions that are forward looking and subject to many variables outside of MGT and B&D’s control as well as data provided by the Borrower and relied upon the accuracy thereof by MGT and B&D, and as such, MGT and B&D offer no guarantee of the accuracy of its Market Studies and MGT and B&D shall not be held liable for any costs, expenses, losses, damages, claims, or actions in connection with the Series 2019 Bonds.

FORWARD LOOKING STATEMENTS

This Official Statement, including but not limited to the information contained in the Market Studies and the Cash Flow Projection, contains statements relating to future results that are “forward looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words “estimate,” “projection,” “intend,” “expect,” and similar expressions identify forward looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. The factors that may cause projected revenues and expenditures to be materially different from those anticipated include (1) the ability to market the Series 2019 Project, (2) the ability of the Series 2019 Project to maintain substantial occupancy at projected increased rent levels of Building 100, (3) the ability of the residents of Building 100 to meet their financial obligations, (4) lower than anticipated revenues, (5) higher than anticipated operating expenses, (6) litigation, (7) changes in governmental regulation, (8) loss of federal tax-exempt status of the Borrower, (9) loss of any full or partial local property tax exemption, (10) changes in demographic trends, (11) competition from other residential rental projects, (12) changes in the student housing industry, and (13) general economic conditions. No representation or assurances can be made that Revenues will be generated from the operation of the Series 2019 Project in amounts sufficient to pay maturing principal and interest on the Series 2019 Bonds.

CONSEQUENCES OF CHANGES IN BEYOND OWNERS GROUP’S TAX STATUS

Beyond Owners Group has obtained a determination letter from the Internal Revenue Service stating that it will be treated as an exempt organization as described in §501(c)(3) of the Code and can reasonably be expected to not be classified as a “private foundation.” In order for Beyond Owners Group to maintain its exempt status and to not be considered a private foundation, Beyond Owners Group and the Borrower will be subject to a number of requirements affecting their operations. The possible modification or repeal of certain existing federal income tax laws, the change of Internal Revenue Service policies or positions, the change of Beyond Owners Group’s or the Borrower’s method of operations, purposes or character or other factors could result in loss by Beyond Owners Group of its tax-exempt status.

The Borrower will covenant to cause Beyond Owners Group to remain eligible for such tax-exempt status and to avoid operating the Series 2019 Project as an unrelated trade or business (as determined by applying §512(a) of the Code). Failure of the Series 2019 Project to remain so qualified or of the Borrower so to operate the Series 2019 Project could affect the funds available to the Borrower for payments under the Loan Agreement by subjecting Beyond Owners Group and the Borrower to federal income taxation and could result in the loss of the excludability of interest on the Series 2019A Bonds from gross income for purposes of federal income taxation. Continuation of the tax-exempt status of the Series 2019A Bonds may also be dependent upon the continuing tax-exempt status of Beyond Owners Group. See “CERTAIN BONDHOLDERS’ RISKS - EFFECT OF DETERMINATION OF TAXABILITY” below.

EFFECT OF DETERMINATION OF TAXABILITY

The Borrower and the Authority each will covenant not to take any action that would cause the Series 2019A Bonds to be arbitrage bonds or that would otherwise adversely affect the federal income tax status of interest on the Series 2019A Bonds. The Borrower has also made representations with respect to certain matters within its knowledge which have been relied on by Bond Counsel and which Bond Counsel has not independently verified. Failure by the parties to the Loan Agreement, Tax Regulatory Agreement and Indenture to comply with their respective covenants thereunder could result in interest on the Series 2019A Bonds becoming includible in gross income for federal tax purposes.

It is possible that a period of time may elapse between the occurrence of the event which causes interest to become taxable and the determination that such an event has occurred. In such a case, interest previously paid on the Series 2019A Bonds could become retroactively taxable from the date of their issuance. Additionally, certain owners of Series 2019A Bonds are subject to possible adverse tax consequences. See “TAX MATTERS” herein.

TAXATION OF SERIES 2019 BONDS

An opinion of Bond Counsel will be obtained as described under “TAX MATTERS” herein. Such an opinion is not binding on the Internal Revenue Service. Application for a ruling from the Internal Revenue Service regarding the status of the interest on the Series 2019A Bonds has not been made. The opinion of Bond Counsel contains certain exceptions and is based on certain assumptions described herein under the heading “TAX MATTERS.” Failure by the Authority or the Borrower to comply with certain provisions of the Code and covenants contained in the Indenture, the Loan Agreement, and the Tax Agreement could result in interest on the Series 2019A Bonds becoming includable in gross income for federal tax purposes.

An opinion of Bond Counsel will be obtained regarding the exemption of interest on the Series 2019 Bonds from certain taxation by the State of North Carolina, as described under “TAX MATTERS” herein. Bond Counsel has not opined as to whether interest on the Series 2019 Bonds is subject to state or local income taxation in jurisdictions other than North Carolina. Interest on the Series 2019 Bonds may or may not be subject to state or local income taxation in jurisdictions other than North Carolina under applicable state or local laws. Each purchaser of the Series 2019 Bonds should consult his or her own tax advisor regarding the taxable status of the Series 2019 Bonds in a particular state or local jurisdiction.

RISK OF AUDIT BY INTERNAL REVENUE SERVICE

The Internal Revenue Service has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Internal Revenue Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. Certain types of transactions are being targeted for audit, including financings of student housing facilities.

No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Series 2019A Bonds. If an audit is commenced, under current procedures the Internal Revenue Service is likely to treat the Authority as the taxpayer and the Bondholders may have no right to participate in such procedure. Neither the Underwriter nor Bond Counsel will be obligated to defend the tax-exempt status of the Series 2019A Bonds. Neither the Authority nor Bond Counsel will be responsible to pay or reimburse the cost of any Bondholders with respect to any audit or litigation relating to the Series 2019A Bonds.

MARKET AND PRICES FOR THE SERIES 2019 BONDS

The Underwriter will not be obligated to repurchase any of the Series 2019 Bonds and no representation is made concerning the existence of any secondary market therefor, nor can any assurance be given that any secondary market will develop following the completion of the offering of the Series 2019 Bonds, and no assurance can be given that initial offering prices for the Series 2019 Bonds will continue for any period of time. Any prospective purchaser of the Series 2019 Bonds, therefore, should undertake an independent investigation through its own advisors regarding the desirability and practicality of the investment in the Series 2019 Bonds. Any prospective purchaser should be fully aware of the long-term nature of an investment in the Series 2019 Bonds and should assume that it will have to bear the economic risk of its investment indefinitely. Any prospective purchaser of the Series 2019 Bonds that does not intend or that is not able to hold the Series 2019 Bonds for a substantial period of time is advised against investing in the Series 2019 Bonds.

LITIGATION

THE AUTHORITY

From time to time the Authority receives inquiries and requests for documents and information pertaining to unrelated bond issues from various regulatory agencies, including the Securities & Exchange Commission, and in connection with audits by the Internal Revenue Service. To the Authority’s knowledge, as of the date of this Official Statement, there is not pending or threatened, any litigation restraining or enjoining the issuance or delivery of the Series 2019 Bonds or questioning or affecting the validity of the Series 2019 Bonds or the proceedings or authority under which they are to be issued or which in any manner questions the right of the Authority to enter into the Indenture or the Loan Agreement or to secure the Series 2019 Bonds in the manner provided therein.

THE BORROWER

There is no litigation now pending or threatened against the Borrower, of which the Borrower has knowledge, that in any manner questions the right of the Borrower to enter into or perform its obligations under the Loan Agreement, the Series 2019 Notes, the Leasehold Deed of Trust, the Security Agreement, or the Assignment of Contracts or that individually or in the aggregate would adversely affect the operations of the Borrower, financial or otherwise.

TAX MATTERS

OPINION OF BOND COUNSEL – SERIES 2019A BONDS

The opinion of McGuireWoods LLP, Raleigh, North Carolina, Bond Counsel, will state that, under current law, interest on the Series 2019A Bonds is excludable from gross income for purposes of federal income taxation under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and is not a specific item of tax preference for purposes of the federal alternative minimum tax. See “PROPOSED FORM OF OPINION OF BOND COUNSEL” in Appendix F.

Bond Counsel will express no opinion regarding other federal tax consequences arising with respect to the Series 2019A Bonds.

Bond Counsel’s opinion speaks as of its date, is based on current legal authority and precedent, covers certain matters not directly addressed by such authority and precedent, and represents Bond Counsel’s judgment as to the proper treatment of interest on the Series 2019A Bonds for federal income tax purposes. Bond Counsel’s opinion does not contain or provide any opinion or assurance regarding the future activities

of the Authority or the Borrower or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the Internal Revenue Service (the “IRS”). The Authority and the Borrower have covenanted, however, to comply with the requirements of the Code.

RELIANCE AND ASSUMPTIONS; EFFECT OF CERTAIN CHANGES

In delivering its opinion regarding the Series 2019A Bonds, Bond Counsel is relying upon certifications of representatives of the Authority and the Borrower and other parties as to facts material to the opinion, which Bond Counsel has not independently verified.

In addition, Bond Counsel is assuming continuing compliance with the Covenants (as hereinafter defined) by the Authority and the Borrower. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied after the issuance of the Series 2019A Bonds in order for interest on the Series 2019A Bonds to be and remain excludable from gross income for purposes of federal income taxation. These requirements include, by way of example and not limitation, the requirement that the Borrower maintain its status as an organization described in Section 501(c)(3) of the Code, restrictions on the use, expenditure and investment of the proceeds of the Series 2019A Bonds and the use of the property financed or refinanced by the Series 2019A Bonds, limitations on the source of the payment of and the security for the Series 2019A Bonds, and the obligation to rebate certain excess earnings on the gross proceeds of the Series 2019A Bonds to the Treasury of the United States (the “Treasury”). The Trust Agreement, the Loan Agreement and the Tax Certificate contain covenants (the “Covenants”) under which the Authority and the Borrower have agreed to comply with such requirements. Failure by the Authority and the Borrower to comply with their respective Covenants could cause interest on the Series 2019A Bonds to become includable in gross income for federal income tax purposes retroactively to their date of issue. In the event of noncompliance with the Covenants, the available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent interest on the Series 2019A Bonds from becoming includable in gross income for federal income tax purposes. Compliance by the Authority with its respective Covenants does not require the Authority to make any financial contribution for which it does not receive funds from the Borrower. Bond Counsel has no responsibility to monitor compliance with the Covenants after the date of issue of the Series 2019A Bonds.

Certain requirements and procedures contained, incorporated or referred to in the Trust Agreement, the Loan Agreement and the Tax Certificate, including the Covenants, may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth therein. Bond Counsel expresses no opinion concerning any effect on the excludability of interest on the Series 2019A Bonds from gross income for federal income tax purposes of any such subsequent change or action that may be made, taken or omitted upon the advice or approval of counsel other than Bond Counsel.

ORIGINAL ISSUE DISCOUNT

The excess, if any, of the amount payable at maturity of any maturity of the Series 2019A Bonds over the initial public offering price to the public at which price a substantial amount of such maturity is sold constitutes original issue discount, which will be excludable from gross income to the same extent as interest on the Series 2019A Bonds for federal income tax purposes. The Code provides that the amount of original issue discount accrues in accordance with a constant interest method based on the compounding of interest, and that a holder’s adjustable basis for purposes of determining a holder’s gain or loss on disposition of the Series 2019A Bonds with original issue discount (the “OID Bonds”) will be increased by such amount. In addition, original issue discount that accrues in each year to an owner of an OID Bond is included in the calculation of the distribution requirements of certain regulated investment companies and may result in some of the collateral federal income tax consequences discussed below. Consequently, owners of any OID Bond should be aware that the accrual of original issue discount in each year may result in additional

distribution requirements or other collateral federal income tax consequences although the owner of such OID Bond has not received cash attributable to such original issue discount in such year.

In the case of an original owner of an OID Bond, the amount of original issue discount that is treated as having accrued on such OID Bond is added to the owner's cost basis in determining, for federal income tax purposes, gain or loss upon its disposition (including its sale, redemption or payment at maturity). The amounts received upon such disposition that are attributable to accrued original issue discount will be excluded from the gross income of the recipients for federal income tax purposes. The accrual of original issue discount and its effect on the redemption, sale or other disposition of OID Bonds that are not purchased in the initial offering at the initial offering price may be determined according to rules that differ from those described above.

Owners of OID Bonds should consult their own tax advisors with respect to the determination for federal income tax purposes of the amount of original issue discount or interest properly accruable with respect to such OID Bonds, other tax consequences of owning OID Bonds and other state and local tax consequences of holding such OID Bonds.

ORIGINAL ISSUE PREMIUM

In general, if an owner acquires a bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the bond after the acquisition date (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates), that premium constitutes “bond premium” on that bond (a “Premium Bond”). In general, under Section 171 of the Code, an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium Bond, based on the owner's yield over the remaining term of the Premium Bond, determined based on constant yield principles. An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner's regular method of accounting against the bond premium allocable to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner's original acquisition cost.

Prospective purchasers of any Premium Bond should consult their own tax advisors regarding the treatment of bond premium for federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of such Premium Bond.

CERTAIN COLLATERAL FEDERAL TAX CONSEQUENCES

The following is a brief discussion of certain collateral federal income tax matters with respect to the Series 2019A Bonds. It does not purport to address all aspects of federal taxation that may be relevant to a particular owner thereof. Prospective purchasers of the Series 2019A Bonds, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the federal tax consequences of owning or disposing of the Series 2019A Bonds.

Prospective purchasers of the Series 2019A Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, certain insurance companies, certain corporations (including S corporations and foreign corporations), certain foreign corporations subject to the “branch profits tax,” individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred

or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers attempting to qualify for the earned income tax credit.

In addition, prospective purchasers should be aware that the interest paid on, and the proceeds of the sale of, tax-exempt obligations, including the Series 2019A Bonds, are in many cases required to be reported to the IRS in a manner similar to interest paid on taxable obligations. Additionally, backup withholding may apply to any such payments made after March 31, 2007 to any owner of a Series 2019A Bond who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any owner of a Series 2019A Bond who is notified by the IRS of a failure to report all interest and dividends required to be shown on federal income tax returns. The reporting and withholding requirements do not in and of themselves affect the excludability of interest on the Series 2019A Bonds from gross income for federal tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations.

AUDITS; POSSIBLE LEGISLATIVE OR REGULATORY ACTION

The IRS has established a program to audit tax-exempt obligations to determine whether the interest thereon is includable in gross income for federal income tax purposes. If the IRS does audit the Series 2019A Bonds, the IRS will, under its current procedures, treat the Authority as the taxpayer. As such, the beneficial owners of the Series 2019A Bonds will have only limited rights, if any, to participate in the audit or any administrative or judicial review or appeal thereof. Any action of the IRS, including but not limited to the selection of the Series 2019A Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the marketability or market value of the Series 2019A Bonds.

Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and various state legislatures. Such legislation may effect changes in federal or state income tax rates and the application of federal or state income tax laws (including the substitution of another type of tax), or may repeal or reduce the benefit of the excludability of interest on the tax-exempt obligations from gross income for federal or state income tax purposes. The Treasury and the IRS are continuously drafting regulations to interpret and apply the provisions of the Code and court proceedings may be filed the outcome of which could modify the federal or state tax treatment of tax-exempt obligations. There can be no assurance that legislation proposed or enacted after the date of issue of the Series 2019A Bonds, regulatory interpretation of the Code or actions by a court involving either the Series 2019A Bonds or other tax-exempt obligations will not have an adverse effect on the federal or state tax status of the Series 2019A Bonds or the marketability or market price of the Series 2019A Bonds or on the economic value of the tax-exempt status of the interest on the Series 2019A Bonds.

Prospective purchasers of the Series 2019A Bonds should consult their own tax advisors regarding the potential consequences of any such pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.

OPINION OF BOND COUNSEL – FEDERAL INCOME TAX STATUS OF INTEREST – SERIES 2019B BONDS

In the opinion of Bond Counsel, under existing law, interest on the Series 2019B Bonds is includable in the gross income of the owners thereof for federal income tax purposes.

SUMMARY

The following is a summary of certain of the United States federal income tax consequences of the ownership and disposition of the Series 2019B Bonds as of the date hereof. Each prospective purchaser of

the Series 2019B Bonds should consult with its own tax advisor regarding the application of United States federal income tax laws, as well as any state, local, foreign or other tax laws, to its particular situation. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law, which implemented significant and wide-ranging changes to many aspects of the United States federal income tax regime. Certain changes in federal tax law that may have an impact on the Series 2019B Bonds are detailed below. However, since this tax law was recently enacted, much of the guidance relating to the Tax Cuts and Jobs Act of 2017 from the IRS has yet to be issued. Accordingly, a full evaluation of the Tax Cuts and Jobs Act of 2017 and its potential implications cannot be thoroughly addressed without further and more complete guidance from the IRS. Investors are encouraged to consult with their own tax advisors regarding the implications of the Tax Cuts and Jobs Act of 2017 on their investment in a Series 2019B Bond.

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), as well as U.S. Treasury Department regulations and administrative and judicial rulings and practice. Legislative, judicial and administrative changes may occur, possibly with retroactive effect, that could alter or modify the continued validity of the statements and conclusions set forth herein. This summary is intended as a general explanatory discussion of the consequences of holding the Series 2019B Bonds generally and does not purport to furnish information in the level of detail or with the prospective purchaser’s specific tax circumstances that would be provided by a prospective purchaser’s own tax advisor. For example, this summary deals only with Series 2019B Bonds held as capital assets within the meaning of Section 1221 of the Code and does not address tax consequences to owners that may be relevant to investors subject to special rules, such as trusts, estates, tax-exempt investors, cash method taxpayers, dealers in securities, currencies or commodities, banks, thrifts, insurance companies, electing large partnerships, mutual funds, regulated investment companies, real estate investment trusts, S corporations, persons that hold Series 2019B Bonds as part of a straddle, hedge, integrated or conversion transaction, and persons whose “functional currency” is not the U.S. dollar. In addition, this summary does not address alternative minimum tax issues or the indirect consequences to a holder of an equity interest in an owner of Series 2019B Bonds.

As used herein, a “U.S. holder” is a U.S. person that is a beneficial owner of a Series 2019B Bond. For these purposes, a “U.S. person” is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof (except, in the case of a partnership, to the extent otherwise provided in U.S. Treasury Department regulations), an estate the income of which is subject to United States federal income taxation regardless of its source or a trust if (i) a United States court is able to exercise primary supervision over the trust’s administration and (ii) one or more U.S. persons have the authority to control all of the trust’s substantial decisions. A “non-U.S. holder” is a holder (or beneficial owner) of a Series 2019B Bond that is not a U.S. person.

TAX STATUS OF THE SERIES 2019B BONDS

U.S. Holders

Interest. Interest on the Series 2019B Bonds generally will be taxable to a U.S. holder as ordinary interest income, at the time such amounts are accrued or received, in accordance with the U.S. holder’s method of accounting for federal income tax purposes.

To the extent that the issue price of any maturity of the Series 2019B Bonds is less than the amount to be paid at maturity of such Series 2019B Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2019B Bonds), the difference may constitute original issue discount (“OID”). U.S. holders of Series 2019B Bonds will be required to include OID in income for federal income tax purposes as it accrues, in accordance with a constant yield method, based on a compounding of interest (which may be before the receipt of cash payments attributable to such income). Under this method,

U.S. holders generally will be required to include in income increasingly greater amounts of OID in successive accrual periods.

Series 2019B Bonds purchased for an amount in excess of the principal amount payable at maturity (or, in some cases, at their earlier call date) will be treated as issued at a premium. A U.S. holder of a Series 2019B Bond issued at a premium may make an election, applicable to all debt securities purchased at a premium by such U.S. holder, to amortize such premium, using a constant yield method over the term of such Series 2019B Bond.

Sale or Other Taxable Disposition of the Series 2019B Bonds. Unless a nonrecognition provision of the Code applies, the sale, exchange, redemption, retirement or other disposition of a Series 2019B Bond will be a taxable event for federal income tax purposes. In such event, in general, a U.S. holder of a Series 2019B Bond will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of property received (except to the extent attributable to accrued but unpaid interest on the Series 2019B Bond, which will be taxed in the manner described above) and (ii) the U.S. holder’s adjusted U.S. federal income tax basis in the Series 2019B Bond (generally, the purchase price paid by the U.S. holder for the Series 2019B Bond, decreased by any amortized premium, and increased by the amount of any OID previously included in income by such U.S. holder with respect to such Series 2019B Bond). Any such gain or loss generally will be capital gain or loss. In the case of a non-corporate U.S. holder of Series 2019B Bonds, the maximum marginal federal income tax rate applicable to any such gain will be lower than the maximum marginal federal income tax rate applicable to ordinary income if such U.S. holder’s holding period for the Series 2019B Bonds exceeds one year. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding. Payments on the Series 2019B Bonds generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Department regulations issued thereunder, a non-corporate U.S. holder of the Series 2019B Bonds may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Series 2019B Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Series 2019B Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the Internal Revenue Service notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(l)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against the U.S. holder’s federal income tax liability, if any, provided that the required information is timely furnished to the Internal Revenue Service. Certain U.S. holders (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. A holder’s failure to comply with the backup withholding rules may result in the imposition of penalties by the Internal Revenue Service.

Non-U.S. Holders

Interest. Subject to the discussion below under the headings “Information Reporting and Backup Withholding” and “FATCA,” payments of principal of, and interest on, any Series 2019B Bond to a Non- U.S. holder, other than (i) a controlled foreign corporation (as such term is defined in the Code), (ii) a “10- percent shareholder” (within the meaning of Section 871(h) of the Code) and (iii) a bank which acquires such Series 2019B Bond in consideration of an extension of credit made pursuant to a loan agreement entered into in the ordinary course of business, will not be subject to any U.S. federal withholding tax provided that the non-U.S. holder of the Series 2019B Bond provides a certification completed in compliance with applicable statutory and regulatory requirements, which requirements are discussed below under the heading “Information Reporting and Backup Withholding,” or an exemption is otherwise established.

Disposition of Series 2019B Bonds. Subject to the discussion below under the headings “Information Reporting and Backup Withholding” and “FATCA,” any gain realized by a Non-U.S. holder upon the sale, exchange, redemption, retirement (including pursuant to an offer by WFBMC) or other disposition of a Series 2019B Bond generally will not be subject to U.S. federal income tax, unless (i) such gain is effectively connected with the conduct by such Non-U.S. holder of a trade or business within the United States; or (ii) in the case of any gain realized by an individual Non-U.S. holder, such holder is present in the United States for 183 days or more in the taxable year of such sale, exchange, redemption, retirement (including pursuant to an offer by WFBMC) or other disposition and certain other conditions are met.

U.S. Federal Estate Tax. A Series 2019B Bond that is held by an individual who at the time of death is not a citizen or resident of the United States will not be subject to U.S. federal estate tax as a result of such individual’s death, provided that, at the time of such individual’s death, payments of interest with respect to such Series 2019B Bond would not have been effectively connected with the conduct by such individual of a trade or business within the United States.

Information Reporting and Backup Withholding. Subject to the discussion below under the heading “FATCA,” under current U.S. Treasury Department regulations, payments of principal and interest on any Series 2019B Bonds to a Non-U.S. holder will not be subject to any backup withholding tax requirements if the Non-U.S. holder or a financial institution holding the Series 2019B Bond on behalf of the Non-U.S. holder in the ordinary course of its trade or business provides an appropriate certification to the payor and the payor does not have actual knowledge that the certification is false. If a Non-U.S. holder provides the certification, the certification must give the name and address of such holder, state that such holder is not a United States person, or, in the case of an individual, that such holder is neither a citizen nor a resident of the United States, and the holder must sign the certificate under penalties of perjury.

Foreign Account Tax Compliance Act (“FATCA”). Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to foreign financial institutions, unless the foreign financial institution enters into an agreement with the U.S. Treasury Department to, among other things, undertake to identify accounts held by certain U.S. persons or U.S.-owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition, FATCA imposes a 30% withholding tax on the same types of payments to a non-financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or the entity furnishes identifying information regarding each substantial U.S. owner. Failure to comply with the additional certification, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of principal of and interest on the Series 2019B Bonds and sales proceeds of Series 2019B Bonds held by or through a foreign entity. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and will apply to (i) gross proceeds from the sale, exchange or retirement of debt obligations paid after December 31, 2018 and (ii) certain “pass-thru” payments no earlier than January 1, 2019. Prospective investors should consult their own tax advisors regarding FATCA and its effect on them.

DEFEASANCE

Defeasance of any Series 2019B Bond may result in a deemed disposition of such Series 2019B Bond and a deemed reissuance of a “new” Series 2019B Bond to the holder for U.S. federal income tax purposes, in which case a holder would recognize taxable gain or loss equal to the difference between the amount realized from the deemed exchange and the holder’s adjusted tax basis in the Series 2019B Bond. The “new” Series 2019B Bond deemed reissued in such a defeasance may be treated as issued with original issue discount in an amount equal to the excess, if any, of the stated redemption price at maturity of the “new” Series 2019B Bond over its deemed issue price. Prospective investors are urged to consult their own tax advisors regarding the tax consequences of a defeasance of the Series 2019B Bonds.

ADDITIONAL MEDICARE TAX

An additional 3.8% tax will be imposed on the “net investment income” of certain individuals, estates and trust that have “modified adjusted gross income” above a certain threshold. Net investment income includes, but is not limited to, interest on a Series 2019B Bond and gains from the sale or disposition of a Series 2019B Bond. Prospective investors should consult their tax advisors regarding the possible applicability of this tax to an investment in the Series 2019B Bonds.

UNDERWRITING

RBC Capital Markets, LLC (the “Underwriter”) is purchasing the Series 2019 Bonds and intends to offer the Series 2019 Bonds to the original purchasers thereof at the offering prices set forth on the cover page of this Official Statement, which offering price may subsequently be changed without any requirement of prior notice. The Underwriter will purchase the Series 2019A Bonds at a price equal $64,222,921.70 (being $60,760,000.00, the principal amount thereof, plus $3,918,949.45 of original issue premium less $91,467.75 of original issue discount and less $364,560.00 of Underwriter’s discount), and the Underwriter will purchase the Series 2019B Bonds at a price equal to $919,450.00 (being $925,000.00, the principal amount thereof, less $5,550.00 of Underwriter’s discount). From such amounts, the Underwriter will directly wire the amount of $909,999.09 to the Series 2019 Bond Insurer as payment of the premium for the Series 2019 Bond Insurance Policy and $64,465.57 to the Series 2019 Bond Insurer as payment of the premium for the Series 2019A Reserve Policy.

The Underwriter has reserved the right to permit other securities dealers who are members of the Financial Industry Regulatory Authority to assist in selling the Series 2019 Bonds. The Underwriter may offer and sell Series 2019 Bonds to certain dealers at prices lower than the public offering price or otherwise allow concessions to such dealers who may re-allow concessions to other dealers. Any discounts and/or commissions that may be received by such dealers in connection with the sale of the Series 2019 Bonds will be deducted from the Underwriter’s discount.

The Borrower will agree to indemnify the Underwriter against certain civil liabilities, including certain liabilities under federal securities laws. Under existing statutes, regulations, and court decisions, the enforceability of such an agreement to indemnify is uncertain.

SPECIAL RELATIONSHIPS

RBC Capital Markets, LLC has provided the following information for inclusion in this Official Statement: The Underwriter and its affiliates are full-service financial institutions engaged in various activities, that may include securities trading, commercial and investment banking, municipal advisory, brokerage, and asset management. In the ordinary course of business, the Underwriter and its affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Authority. The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Authority. The Underwriter does not make a market in credit default swaps with respect to municipal securities at this time but may do so in the future.

RATINGS

Moody’s Investor Services, Inc. (“Moody’s”) and S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”), are expected to assign the Series 2019 Bonds the long-term ratings

of “A2” (stable outlook) and “AA” (stable outlook), respectively, based on the understanding that upon the issuance of the Series 2019 Bonds, the Series 2019 Bond Insurance Policy insuring the scheduled payments of principal of and interest on the Series 2019 Bonds will be issued by the Series 2019 Bond Insurer. Moody’s and S&P have assigned the Series 2019 Bonds a rating of “Baa3” and “BBB-,” respectively, without regard to the issuance of the Series 2019 Bond Insurance Policy. An explanation of the significance of such ratings may be obtained from Moody’s and S&P. Such ratings reflect only the view of Moody’s and S&P, respectively, and neither the Authority, the University nor the Underwriter make any representation as to the appropriateness thereof.

There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely, if in the judgment of Moody’s or S&P, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2019 Bonds.

LEGAL MATTERS AND OTHER ADVISORS

All legal matters incidental to the authorization and issuance of the Series 2019 Bonds will be subject to the approving opinion of McGuireWoods LLP, Raleigh, North Carolina, Bond Counsel, the form of which is included as Appendix F hereto. Certain legal matters will be passed on for the Authority by its counsel, von Briesen & Roper, s.c., Milwaukee, Wisconsin; for the University by its counsel, Bryant Miller Olive P.A., Orlando, Florida; for the Borrower and Beyond Owners Group by their counsel, MacElree Harvey, Ltd, West Chester, Pennsylvania and Johnston, Allison & Hord, PA, Charlotte, North Carolina; and for the Underwriter by its counsel, Parker Poe Adams & Bernstein LLP, Charlotte, North Carolina.

First Tryon Advisors, a business of First Tryon Securities, LLC, has acted as financial advisor to the University in connection with the issuance of the Series 2019 Bonds. The financial advisor does not assume any responsibility for the information, covenants, and representations contained in any of the legal documents with respect to the federal income tax status of the Series 2019 Bonds, or the possible impact of any present, pending, or future actions taken by any legislative or judicial bodies. The financial advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the University and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the financial advisor does not guarantee the accuracy or completeness of such information. The financial advisor’s fee for services rendered with respect to the sale of the Series 2019 Bonds is contingent upon the execution and delivery of the Series 2019 Bonds.

Bond Counsel has been engaged primarily for the purpose of preparing certain legal documents and supporting certificates, reviewing the transcript of proceedings by which the Series 2019 Bonds have been authorized to be issued, and rendering opinions as to the validity and enforceability of the Series 2019 Bonds and to the exemption or lack thereof of interest thereon from income taxation by the United States of America. While Bond Counsel has assisted in the preparation of this Official Statement and is of the opinion that the statements and descriptions made herein under the headings “SUMMARY STATEMENT - THE SERIES 2019A BONDS,” and “- THE SERIES 2019B BONDS,” “THE SERIES 2019 BONDS,” “TAX MATTERS,” “LEGAL MATTERS,” “DEFINITIONS” in Appendix C, and “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS” in Appendix D hereto fairly summarize the matters there referred to, such counsel has not been engaged to confirm or verify, has not confirmed or verified, and will express no opinion with respect to the accuracy, completeness, or fairness of any other information contained in this Official Statement (other than the form of legal opinion set forth in Appendix F).

None of the legal counsel referenced in this Official Statement has (a) participated in the underwriting of the Series 2019 Bonds, (b) provided any advice regarding the creditworthiness of the Series 2019 Bonds, or (c) assisted in determining the value of the collateral for the Series 2019 Bonds upon the occurrence of an event of default. Legal counsel have solely and exclusively opined to those matters which

are expressly set forth in their opinions which are attached hereto or which have been delivered in connection herewith and no holder of a Series 2019 Bond shall be authorized or entitled to infer that such legal counsel have rendered opinions beyond those stated in their written opinions or to rely on the participation of counsel in this transaction. Except for negligent errors in their express written opinions, legal counsel shall have no obligations to holders of the Series 2019 Bonds and holders of the Series 2019 Bonds must not rely either expressly or implicitly upon such counsel in determining whether the Series 2019 Bonds represent suitable investments or otherwise meet their creditworthiness and risk tolerance standards.

CONTINUING DISCLOSURE

In accordance with Securities and Exchange Commission Rule 15c2-12 (the “Rule”) and so long as the Series 2019 Bonds are Outstanding, the Borrower has agreed pursuant to a Continuing Disclosure Agreement between the Borrower and the Trustee, as dissemination agent, dated as of February 1, 2019 (the “Continuing Disclosure Agreement”), to cause certain information about the Borrower and the Series 2019 Project to be provided. The form of the Continuing Disclosure Agreement has been included as Appendix G hereto.

The Continuing Disclosure Agreement provides bondholders with certain enforcement rights in the event of a failure by the Borrower to comply with the terms thereof; however, a default under the Continuing Disclosure Agreement does not constitute a default under the Indenture or the Loan Agreement. The Continuing Disclosure Agreement may be amended or terminated under certain circumstances in accordance with the Rule as more fully described therein. Bondholders are advised that the Continuing Disclosure Agreement, copies of which are available at the office of the Trustee, should be read in its entirety for more complete information regarding its contents.

The Borrower has not previously entered into a continuing disclosure undertaking pursuant to the Rule.

MISCELLANEOUS

The information set forth herein relating to the Borrower and Beyond Owners Group has been furnished by the Borrower.

The information set forth herein under the headings “THE DEVELOPMENT AND THE DEVELOPMENT TEAM” and “THE SERIES 2019 PROJECT” have been furnished by the Developer.

The information set forth herein regarding the University has been primarily compiled from publicly available statements and information.

The Authority has furnished only the information included herein under the headings, “THE AUTHORITY,” and “LITIGATION - THE AUTHORITY.”

McGuireWoods LLP is serving as Bond Counsel in connection with the Series 2019 Bonds and, from time to time, it, and Bryant Miller Olive P.A., counsel to the University, and Parker Poe Adams & Bernstein LLP, counsel to the Underwriter, have represented the Issuer, the Underwriter and the Trustee in other financing transactions. None of the Issuer, the Underwriter or the Trustee have conditioned the future employment of such firms in connection with any proposed financing issues for the Issuer, the Underwriter or the Trustee on the successful issuance of the Series 2019 Bonds.

Any statements made in this Official Statement involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized. Neither this Official Statement nor any

statement that may have been made orally or in writing is to be construed as a contract with the owners of the Series 2019 Bonds.

The Borrower has duly authorized the delivery and distribution of this Official Statement in connection with the offering of the Series 2019 Bonds.

[Remainder of page left intentionally blank]

APPENDIX A

MARKET STUDIES

[ THIS PAGE INTENTIONALLY LEFT BLANK ] STUDENT HOUSING DEMAND ASSESSMENT APPALACHIAN STATE UNIVERSITY

NOVEMBER 2017 | REPORT [ THIS PAGE INTENTIONALLY LEFT BLANK ]

PREFACE

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BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

EXECUTIVE SUMMARY

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NOVEMBER 2017 3

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BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

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BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

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4,000 3,656 3,500 3,324

3,000

2,500

2,000 1,599 1,510 1,500 1,086 1,000 849

500 284 0 0 Traditional Semi-Suite Full-Suite Apartment

Supply Demand

3,789 4,000 3,656 3,579 3,500

3,000

2,500 1,908 2,000 1,599 1,711 1,500 1,123 963 1,000 504 500 284 0 0 0 Traditional Semi-Suite Full-Suite Apartment

2025 Supply 2025 Recommended Supply 2025 Projected Demand

BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

NOVEMBER 2017 9

0% 10% 20% 30% 40% 50% 60%

Freshmen 55%

Sophomores 28%

Juniors 5%

Transfer 5%

Seniors 3%

Resident Assistants 2%

International Exchange 1%

Graduates 0%

BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

Year 2020-21 2025-26

Full- Full- Enrollment Classification Suite/Apartment Suite/Apartment Demand Demand

Freshman 0 0 Sophomore 1,400 1,512 Junior 585 632 Senior 423 457 Gross Demand 2,409 2,600 Current Capacity 284 284 Net Demand -2,125 -2,316

Total Future On-Campus Projected New Net Beds On-Campus Remaining Year Bed Supply On-Campus Project Demand Removed Supply Demand (Non-RA) Housing Beds (Non-RA) Demand 2017-18 5,539 6,769 (1,230) 5,539 (1,230) 2018-19 5,539 6,878 (1,339) 5,539 (1,339) 2019-20 5,539 6,988 (1,449) 5,539 (1,449) 2020-21 5,539 7,106 (1,567) 312 400 5,627 (1,479) 2021-22 5,539 7,238 (1,699) 563 600 5,664 (1,574) 2022-23 5,539 7,346 (1,807) 5,664 (1,682) 2023-24 5,539 7,457 (1,918) 560 700 5,804 (1,653) 2024-25 5,539 7,575 (2,036) 5,804 (1,771) 2025-26 5,539 7,693 (2,154) 362 500 5,942 (1,751)

NOVEMBER 2017 11

DETAILED FINDINGS

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BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

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BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

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BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

Enrollment Maximum Potential Full-time Enrollment Potential Capture Rate Classification Demand

Freshman 3,339 99.0% 3,305 Sophomore 4,688 46.2% 2,167 Junior 3,876 27.0% 1,046 Senior 4,427 11.7% 520 Graduate / Professional 973 9.2% 68 Market Demand 17,303 41.1% 7,106 Existing Bed Count 5,539 Net Demand ( Surplus / (Deficit) ) (1,567)

NOVEMBER 2017 17

Enrollment Maximum Potential Full-time Enrollment Potential Capture Rate Classification Demand

Freshman 3,604 99.0% 3,568 Sophomore 5,061 46.2% 2,339 Junior 4,185 27.0% 1,129 Senior 4,779 11.7% 561 Graduate / Professional 1,041 9.2% 95 Market Demand 18,670 41.2% 7,693 Existing Bed Count 5,539 Net Demand ( Surplus / (Deficit) ) (2,154)

BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

4,000 3,789 3,656 3,500

3,000 2,673 2,500

2,000 1,599 1,500 1,231

1,000

500 284

0 Traditional-Style Semi-Suite Full-Suite/Apartment Style

2025 Supply Projected 2025 Demand

NOVEMBER 2017 19

BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

Beds Available Unit Type 0 to 1 mile 1 to 3 miles (If Single- Occupied) Studio 50 67 117 1-bedroom 36 66 102 2-bedrooms 37 230 534 3-bedrooms 14 366 760 4-bedrooms 43 296 678 Total 180 1,025 2,191

Unit Type 0 to 1 Mile 1 to 3 Miles Studio Apartment (Off-Campus) $700 $776 1-bedroom Apartment (Off-Campus) $765 $898 2-bedroom Apartment (Off-Campus) $795 $721 3-bedroom Apartment (Off-Campus) $874 $684 4-bedroom Apartment (Off-Campus) $579 $565

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12 11 11

10 9

4 2 2

0 0 to 1 Mile 1 to 3 Miles

Pre-2005 2005-2017

$0 $200 $400 $600 $800 $1,000

Traditional Double Occupancy $531

Semi-Suite Double Occupancy $546

2-bedroom Apartment (On-Campus) $568

4-bedroom Apartment (Off-Campus) $579

Studio Apartment (Off-Campus) $700

1-bedroom Apartment (Off-Campus) $765

2-bedroom Apartment (Off-Campus) $795

3-bedroom Apartment (Off-Campus) $874

BRAILSFORD & DUNLAVEY INSPIRE. EMPOWER. ADVANCE.

100.4% 100.7% 100.2% 100.6% 98.5% 98.0% 98.3% 97.5% 99.2% 96.9% 98.4% 100.0% 94.8%

80.0%

60.0%

40.0%

20.0%

0.0% Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring Fall Spring 2011 2012 2012 2013 2013 2014 2014 2010 2015 2016 2016 2017

NOVEMBER 2017 23

INSPIRE. EMPOWER. ADVANCE.

[email protected] PROGRAMMANAGERS.COM

Student Housing Study for Appalachian State University for Beyond Owners Group

Final: January 9, 2019

4320 W. Kennedy Boulevard, Suite 200 | Tampa, FL 33609 | 888‐302‐0899 | mgtconsulting.com TABLE OF CONTENTS: MGT HEADER TOP

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

EXECUTIVE SUMMARY ...... 1 EXISTING HOUSING ...... 5 OFF‐CAMPUS MARKET ...... 7

OVERVIEW ...... 7

BOONE, NORTH CAROLINA ...... 7

RENTAL RATES AND OCCUPANCY ...... 7

PIPELINE ...... 11

CONCLUSION ...... 12 PEER INSTITUTION ANALYSIS ...... 13

OVERVIEW ...... 13

CAPACITY AND OCCUPANCY ...... 13

HOUSING COST ...... 14

HOUSING UNIT MIX ...... 14

COST OF ATTENDANCE ...... 15

HOUSING CHANGES ...... 16

UPPER‐CLASS RETENTION ...... 16 SURVEY REVIEW AND DEMAND ANALYSIS ...... 18

OVERVIEW ...... 18

ENROLLMENT GROWTH ...... 18

DEMAND BY CLASSIFICATION ...... 18

RECONCILIATION OF DEMAND AND SUPPLY ...... 19

CONCLUSION ...... 20 ATTACHMENT 1: MAJOR OFF‐CAMPUS RENTAL PROPERTIES ATTACHMENT 2: PEER INSTITUTION DATA TABLES

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EXECUTIVE SUMMARY

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

EXECUTIVE SUMMARY Beyond Owners Group (BOG) engaged MGT Consulting Group (MGT) to conduct a Student Housing Study for Appalachian State University (Appalachian) in Boone, NC, in December 2018. The purpose of the study was to have an independent third party review, update, and supplement the previous market analysis provided by Brailsford and Dunlavey (B&D). MGT visited campus, toured campus housing, visited nearby apartment properties, and spoke with administrators. MGT collected data on the off‐campus market and on peer institutions and reviewed the previous B&D demand assessment. MGT’s review and analysis supports BOG and Appalachian proceeding with the current phase of the P3 Housing Project. Appalachian currently offers 5,679 beds in 20 halls. In the P3 Project’s three phases from 2020 to 2022, Appalachian plans to replace 1,797 beds, or 32% of its inventory, with four new buildings with a capacity of about 2,100 beds (90% semi‐suite‐style and 10% apartment‐style). The first phase, with capacity of 912 beds, is planned to open by fall 2020. The current system consists mostly (66%) of traditional community‐ bathroom‐style beds. About 17% are semi‐suite‐style beds, 12% are hotel‐style beds, and 5% are apart‐ ment‐style beds. At the completion of the plan, the system beds will be 33% traditional, 47% semi‐suite‐ style, 12% hotel, and 9% apartment. Room rates at Appalachian fall within a narrow band of between $2,235 and $2,700 per semester. Assum‐ ing a nine‐month academic year, Appalachian’s on‐campus rates range from $497 to $600 per month. The halls to be replaced are all with rates between $2,235 and $2,305, the lowest rates in Appalachian’s sys‐ tem; in effect, the plan will raise the rates of the most affordable on‐campus housing by about $250 per semester. While the proposed rates for similar unit types are 12% higher, MGT believes the P3 Project housing will be more than competitive and likely will be the most popular housing on campus. Located in Watauga County, Boone’s population of 19,205 grew by 12.1% since 2010. Almost 80% of Boone’s residents are renters compared to about 40% in Watauga County and 35% statewide in North Carolina. Construction of larger—with five or more units—multi‐family housing in Boone peaked in 2003 with 339 units permitted, but for the last 37 years there has always been some development either in Boone or elsewhere in the county. Appalachian students are widely distributed in the local apartment market. Boone’s rental market has a wide variety of options for students who wish to rent housing off campus. There are a limited number of major apartment properties that have more than 200 beds, a wide variety of minor smaller properties with four or more units, and various rental houses.

MGT collected data on a sample of six major properties in the market. Together these properties have almost 3,400 beds and all but one are 100% occupied for the current year. Their weighted average dis‐ tance from the center of campus is 2.4 miles. All properties in the sample offer individual leases and cater to Appalachian students. No property offers every unit type from studios to five‐bedroom units, although five of the six offer three‐bedroom units. Median rents range from $605 for living in a five‐bedroom unit at the Cottages to $1,125 for a one‐bedroom unit at the Standard; these two properties offer multiple differentiated models of some unit types. Given the advantage of private bedrooms and disadvantage of

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EXECUTIVE SUMMARY

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

12‐month leases prevalent off campus, the proposed P3 Project housing rates remain competitive with the major properties in Boone. A 12‐month lease term was the only option available at all the major apartments, confirming that the market is “tight,” with managers able to set lease terms to their advantage. Most properties, however, do include the utility costs in the rent. Current availability is extremely limited, although some properties mentioned that they had several current tenants who would gladly sublease their rooms. Boone properties in this sample vary in their amenity packages. While all have dishwashers, air condition‐ ing, and washers and dryers, and all allow pets, few have volleyball or tennis courts or patios or balconies and have furnished units available. None have playgrounds, typically only found at properties that appeal to family renters, showing that this group focuses only on single students.

Boone has many smaller rental properties that are widely dispersed through town, opportunistically lo‐ cated on lots where available. Although the properties have fewer beds, their management may have several hundred beds to offer. Several management firms manage properties for a number of owners, who may be involved in some decision‐making about the properties’ operation. Rents can vary from prop‐ erty to property, as can amenities and features, but a generalization is that these properties have fewer features and amenities than the major properties and they have lower rents. Although a few units have been added or replaced annually, the majority of this multi‐family housing stock seems to date from the 1980s or before. Most still offer only 12‐month leases by the bed. Preleasing has begun for the fall and none reported any challenges compared to last year, when all properties were fully occupied. Watauga County’s planner’s office is not aware of any new large multi‐family projects in the county be‐ yond the boundaries of the town of Boone. In Boone, however, according to Senior Planner Christy Turner, there are three projects under consideration: Rivers Walk, Shadowline, and the Forum. Although they have colorful histories and could bring over 1,000 new beds to market, only the Forum is under way and the others seem unlikely to proceed soon. The Town Council, however, has made it known that they favor no new student housing in Boone for the time being The student housing market in Boone is fully occupied and land constraints challenge any new entrants. While there are some projects in the pipeline that could eventually add some student‐oriented beds to the market, there is little concern among property managers that this will have an impact on their opera‐ tions. Similarly, Appalachian’s additional beds coming online by 2025 are unlikely to find these new de‐ velopments of any threat.

Appalachian considers UNC Charlotte, UNC Greensboro, UNC Wilmington, and Western Carolina Univer‐ sity as relevant housing peer institutions. Appalachian’s current unit mix is more heavily weighted towards traditional‐style units. Subsequent to completion of the plan in 2023, however, its percentage of tradi‐ tional units will be much more in line with peers.

Appalachian has more enrolled students than UNC Wilmington or Western Carolina and more housing capacity as a percentage of enrollment than UNC Greensboro or UNC Wilmington. With 300‐400 more beds, Appalachian would be second to UNC Charlotte in capacity, surpassing UNC Greensboro, but would remain second to Western Carolina in terms of beds as a percentage of enrollment. With occupancy of

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EXECUTIVE SUMMARY

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

100% in fall 2018, Appalachian was the same as two peers, UNC Greensboro and Western Carolina, that also were at 100%. UNC Wilmington was almost full at 99%, and UNC Charlotte had a number of vacancies perhaps to halls coming offline this year, at 89%. Appalachian and Western Carolina have lower rates than the three UNC campuses. UNC Charlotte and Western Carolina have the most rate differentiation among their unit offerings. Appalachian currently has the most traditional‐style rooms of the peer group, although after completing the phased replacement plan, they will have the least except for UNC Charlotte. UNC Greensboro and UNC Wilmington have mixes favoring apartments. UNC Charlotte has the most full suites, with a living area in the unit without a kitchen. Western Carolina costs the least overall to attend due to its inclusion in the NC Promise $500‐per‐semes‐ ter tuition plan, but Appalachian’s room and board are both lower than all peers. Appalachian’s tuition, however, is higher than all peers. Appalachian is not the only campus planning housing changes. UNC Charlotte plans to replace two aging high‐rises removed from service this year. UNC Greensboro is con‐ sidering some housing in its Millennial Campus planning, now in its early stages. UNC Wilmington will open new housing in fall 2020. Western Carolina will open a new 600‐bed hall next fall. Appalachian houses 99% of its first‐time freshmen and 33% of all undergraduates; all peers house a smaller percentage of freshmen, but Western Carolina houses a larger percentage of undergraduates. Freshmen make up 58% of Appalachian’s housing residents, more than any peer except UNC Wilmington. UNC Greensboro has the highest percentage of upper‐class students living in housing, with 59%. While Appalachian (until 2022) and UNC Greensboro must have upper‐class students living in traditional halls, UNC Wilmington must have freshmen living in apartments. In 2017, B&D provided Appalachian with a Student Housing Demand Assessment. Based on enrollment data provided by Appalachian, responses to a student survey, and related analyses, B&D used its Demand‐ Based Programming model to quantify Appalachian’s total on‐campus housing needs. B&D regards their proprietary student housing demand model as a premier planning tool; financial institutions routinely rely upon this model in the underwriting of major capital projects. MGT uses a somewhat similar approach and was able to review and validate B&D’s conclusions. With Appalachian forecasting about 12% enrollment growth over the following eight years, B&D found that by fall 2025, Appalachian would have demand for 2,154 more beds than their fall 2017 capacity. Assuming overall demand remained consistently in the range of 41% to 42% of enrollment, the net new demand beyond capacity grows by 75% over the same eight‐year period.

B&D’s analysis shows that overall demand will grow by almost 600 beds from 2020 to 2024. However, B&D determined that demand was mismatched with the current unit configurations Appalachian offers. Fewer students would prefer traditional beds and more would prefer semi‐suite, full suite, or apartment beds. To address the disparity between supply and demand, B&D recommends that Appalachian reduce the number of traditional beds and increase in the numbers of semi‐suite and apartment beds. Since Ap‐ palachian has a freshman living requirement and follows the conventional residence life theory that tra‐ ditional rooms are developmentally appropriate for freshmen, capacity for traditional‐style units can still exceed demand. Including demolition of the 1,797 traditional beds, B&D recommends a five‐year plan

PAGE 3

EXECUTIVE SUMMARY

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE with 1,980 new semi‐suite‐style beds, which will also suit freshmen programmatically while being more consistent with their preference as well as providing the flexibility to appeal to some sophomores, juniors, and seniors. Recommendations also include 220 apartment beds. B&D recommends increasing the total number of beds while still leaving some of the demand unmet. The P3 Project substantially follows B&D’s recommendations, although it takes only three years and results in 99 fewer beds. The demand analysis has been reviewed by MGT consultants who find the approach and conclusions sound based on B&D’s Demand‐Based Programming model. MGT concurs that the resulting demand es‐ timation is reasonable and consistent with the results of MGT’s off‐campus analysis. While addressing the shortfall of capacity to meet demand by adding new beds, the plan makes Appalachian’s housing system more appealing in terms of the unit types offered. Although there will still be many students who would prefer to live on campus after the plan is complete, they will be at least as well off as they are today with fewer beds available.

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EXISTING HOUSING

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

EXISTING HOUSING Appalachian currently offers 5,679 beds in 20 halls, listed in Table 1. In three phases from 2020 to 2022, Appalachian plans to replace 1,797 beds, or 32% of its inventory, with four new buildings with a capacity of about 2,100 beds (90% semi‐suite‐style and 10% apartment‐style).1 The first phase, with capacity of 912 beds, is planned to open by fall 2020.

Rate

Hall Side of Campus Style Hall Gender Semester Year Max Occ Appalachian Heights West Apartment Co‐Ed by suite $2,700 $5,400 290 Appalachian Panhellenic Hall (APH) East Hotel Female $2,685 $5,370 248 Belk Hall West Traditional Co‐Ed by wing $2,488 $4,976 164 Cannon Hall East Traditional Co‐Ed by room $2,488 $4,976 287 Cone Hall East Traditional Co‐Ed by wing $2,488 $4,976 273 Doughton Hall East Traditional Co‐Ed by room $2,488 $4,976 282 Frank Hall West Traditional Co‐Ed by wing $2,488 $4,976 199 Hoey Hall East Traditional Co‐Ed by wing $2,488 $4,976 268 Living Learning Center (LLC) West Semi‐Suite Co‐Ed by suite $2,600 $5,200 310 Lovill Hall East Traditional Co‐Ed by wing $2,488 $4,976 217 Mountaineer Hall West Hotel Co‐Ed by room $2,650 $5,300 451 Newland Hall West Semi‐Suite Co‐Ed by suite $2,600 $5,200 296 Summit Hall East Semi‐Suite Co‐Ed by suite $2,600 $5,200 333 White Hall East Traditional Female $2,488 $4,976 264 Total Beds to Remain Online After 2022 3,882

Bowie Hall West Traditional Co‐Ed by floor $2,235 $4,470 280 Coltrane Hall West Traditional Co‐Ed by wing $2,235 $4,470 282 East Hall East Traditional Co‐Ed by wing $2,305 $4,610 362 Eggers Hall West Traditional Female $2,235 $4,470 280 Gardner Hall West Traditional Co‐Ed by wing $2,235 $4,470 281 Justice Hall West Traditional Co‐Ed by wing $2,305 $4,610 312 Total Beds to be Replaced 2020–22 1,797

Total Beds Online 2018‐19 5,679

Table 1: Current Housing, Fall 2018

The current system consists mostly (66%) of traditional community‐bathroom‐style beds. About 17% are semi‐suite‐style beds, 12% are hotel‐style beds, and 5% are apartment‐style beds. At the completion of the plan, the system beds will be 33% traditional, 47% semi‐suite‐style, 12% hotel, and 9% apartment. MGT considers traditional and semi‐suite units equally appropriate for freshmen developmentally. Semi‐

1 Appalachian considers Traditional as a bedroom with a community bathroom, Suite as a bedroom with a semi-private bathroom shared with another bedroom, Hotel as a bedroom with a private bathroom, and Apartment as a unit with bedrooms, bathrooms, a living area, and a full kitchen. MGT differentiates between (full) suites with a living area and semi-suites with only bedrooms and bathrooms, and has renamed Appalachian’s “Suite” units as “semi-suites” for consistency throughout the report.

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EXISTING HOUSING

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE suites, however, are much more marketable to freshmen. Prospective students do not, as a rule, find sharing a community bathroom appealing; they greatly prefer semi‐suites’ semi‐private bathrooms. Jun‐ iors would likely prefer apartment living to semi‐suites, but for those who started their housing in tradi‐ tional halls and moved to semi‐suites as sophomores, there is still progression possible if they aspire to live in apartments (whether on or off campus) for their senior year. Room rates at Appalachian fall within a narrow band of between $2,235 and $2,700 per semester. Assum‐ ing a nine‐month academic year, Appalachian’s on‐campus rates range from $497 to $600 per month. The halls to be replaced are all with rates between $2,235 and $2,305, the lowest rates in Appalachian’s sys‐ tem; in effect, the plan will raise the rates of the most affordable on‐campus housing by about $250 per semester. The proposed new housing room rates are shown in Table 2. The two‐bedroom semi‐suite double rate in residence halls is now $2,600, which Appalachian will increase at 4% annually for two years—to minimize the gap with new housing—to $2,812 in 2020–21, so the proposed semi‐suite rate will be 12% higher than the rates for existing housing. Similarly, apartment rates, currently $2,700, will rise to $2,920 in 2020–21, the proposed rate is also 12% higher than for the existing apartments. MGT does not believe that students will resist this modest $76 to $80 monthly premium in order to live in the newest housing on campus, and MGT’s experience suggests that the new housing will be the most popular housing on campus.

Semester Rental Rates per Bed AY 2020‐21 RA Suite $2,440 Semi‐Suite (1BR/1BA) Single $3,153 Semi‐Suite (2BR/1BA) Single $3,153 Semi‐Suite (2BR/1BA) Double $3,153 Apartment (2BR/2BA) Double $3,279

Table 2: Proposed Rental Rates by Unit Type, per Semester per Bed

PAGE 6

OFF-CAMPUS MARKET

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

OFF-CAMPUS MARKET Overview Appalachian students are widely distributed in the local apartment market. MGT found a market delinea‐ tion between a few major properties, that tend to be newer and all have over 200 beds, and hundreds of smaller properties, most with fewer than 100 beds and most managed by firms handling multiple proper‐ ties. A complete map and key to major property names is in Attachment 1. MGT spoke to managers from selected management firms handling smaller properties. Although anecdotal evidence suggests some stu‐ dents rent houses or apartments in smaller “mom‐and‐pop” apartment buildings independently man‐ aged, these properties were not addressed in this study. Boone, North Carolina The town of Boone is located in Watauga County, NC. Boone had a population of 19,205 in 2017, having experienced growth of 12.1% since 2010; the County had a population of 55,121, only having grown 7.9% since 2001. Confirming the prevalence of rental housing and suggesting that most Boone residents are Appalachian students, US Census data shows Boone as having a 21.7% owner‐occupied housing unit rate compared to 58.9% in Watauga County and 65.0% statewide in North Carolina.2 Rental Rates and Occupancy Boone’s rental market has a wide variety of options for students who wish to rent housing off campus. There are a limited number of major apartment properties that have more than 200 beds, a wide variety of minor smaller properties with four or more units, and various rental houses. MAJOR MARKET PROPERTIES

MGT collected data on a sample of six major properties in the market:  The Cottages of Boone

 Highland Crossing

 Mountaineer Village

 The Standard at Boone

 University Highlands, and

 The Village of Meadowview.

The properties and the university are mapped in Figure 1.

2 United States Census Bureau, QuickFacts

PAGE 7

OFF-CAMPUS MARKET

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

Figure 1: Map of Included Major Boone Properties

Together these properties have almost 3,400 beds and all but one are 100% occupied for the current year. Their weighted average distance from the center of campus is 2.4 miles. All properties in the sample offer individual leases and cater to Appalachian students. No property offers every unit type from studios to five‐bedroom units, although five of the six offer three‐bedroom units. Figure 2 shows the per‐person rent ranges by unit type with the median rents ranging from $605 for living in a five‐bedroom unit at the Cot‐ tages to $1,125 for a one‐bedroom unit at the Standard; these two properties offer multiple differentiated models of some unit types. On‐campus semi‐suites rent for $577 per month and apartments for $600 per month, both with double‐occupancy bedrooms and an academic‐year lease term. The major properties’ competitive advantage of private bedrooms and competitive disadvantage of a 12‐month lease will vary for every individual. In terms of dollar cost, however, most students moving off‐campus into one of the major complexes will pay more.

Low Median High $1,125 $1,100 $1,070 $1,065 $968 $1,005 $888 $838 $800 $756 $735 $655 $613 $605 $605 $605 $560 $500

Studio 1BR 2BR 3BR 4BR 5BR ( 3 models at ( 3 models at ( 5 models at ( 7 models at ( 9 models at ( 3 models at 1 property) 2 properties) 3 properties) 5 properties) 3 properties) 1 property) Figure 2: Major Properties Data: Rents, Per Bedroom

PAGE 8

OFF-CAMPUS MARKET

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

A 12‐month lease term was the only option available at all the major apartments, as Figure 3 shows. This confirms that the market is “tight,” with managers able to set lease terms to their advantage. Most prop‐ erties, however, do include the utility costs in the rent and all offer individual leases. Current spring se‐ mester availability is extremely limited, although some properties mentioned that they had several cur‐ rent tenants who would gladly sublease their rooms.

Basic Cable 100% Internet 100% Water/Sewer 100% Heat 83% Electricity 67% 12‐month 100% M‐M 0%

Figure 3: Major Properties' Utilities and Terms Boone properties in this sample vary in their amenity packages. While all have dishwashers, air condition‐ ing, and washers and dryers, and all allow pets, as Figure 4 shows, few have volleyball or tennis courts or patios or balconies and have furnished units available. None have playgrounds, typically only found at properties that appeal to family renters, showing that this group focuses only on single students.

Fitness Ctr 100% Clubhouse 100% Pool 83% Volley 33% Tennis 17% Laundry 0% Playground 0% WD 100% AC 100% DW 100% Pets 83% Furn. 67% Unit Amenities Community Amenities Patio/Balcony 33% WD Conn Only 0%

Figure 4: Major Properties' Unit & Community Amenities Units vary in size, but the rent per square footage provides a constant metric with which to compare, as Figure 5 shows. Studios have the highest rent per square foot at the median, likely because only one model is offered at the Standard, which tends to have higher rents.

PAGE 9

OFF-CAMPUS MARKET

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

Low Median High $2.71 $2.42 $2.24 $2.24 $2.12 $2.04 $2.00 $1.96 $1.90 $1.84 $1.69 $1.68 $1.55 $1.46 $1.31

Studio (n=3) 1BR (n=3) 2BR (n=5) 3BR (n=7) 4BR (n=9)

Figure 5: Major Properties Rents per Square Foot SMALLER PROPERTIES Boone has many smaller rental properties that are widely dispersed through town, opportunistically lo‐ cated on lots where available. Although the properties have fewer beds, their management may have several hundred beds to offer. Keuster Properties manages four properties in addition to the larger Highland Crossing above: Greenway Commons, Greenway Cove, Turtle Creek West, and the Village of Glen Wilde. Typical two‐bedroom rents are $675 per student per month and typical three‐bedroom rents are $675 per student per month; these units are available at all four properties. They assert that their units are known for being particularly spa‐ cious. 10 Federal manages Mountaineer Village and the Village of Meadowview, above, with one smaller prop‐ erty, Studio View, consisting about 120 studio and one‐bedroom apartments. Boone High Country Rentals rents apartments at about eight properties in Boone. Currently no units are available; occupancy is 100%. Management reports typical rents range from $365 to $850 per person; all offer individual leases. Preleasing for next fall has begun, with precise percentages not available. ASU4Rent manages 15 apartment properties. They now rent very few houses. Most are one‐ or two‐ bedroom units. Six individuals own the various properties, but all units are handled the same way. Ac‐ cording to the manager, if anything the opening of the major properties improved the market with some stability when Appalachian’s enrollment went up. Their properties were completely fully preleased in May last year. Their units are not furnished and with one exception, the properties do not include electricity or Wi‐Fi in the monthly rent. A typical one‐bedroom rent is $615. The buildings were built in the 1970s and 1980s.

Winkler Organization Since 1984, Winkler has managed properties in Boone; they currently manage 24 properties which are preleasing for fall 2019. Brown Heights has over 100 units in two properties, with one‐bedroom rents of $575 and two‐bedroom rates starting at $325 per person per month. A 14.5‐month lease starting in May is also an option.

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OFF-CAMPUS MARKET

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

Holton Mountain Rentals leases only to juniors and seniors and reserves some properties for working adults and families. About 600 spaces are for students, however. All spaces were filled for this academic year. Properties are independently owned, and owners make final decisions about rent increases, repairs, and other issues. Pipeline Construction of larger—with five or more units—multi‐family housing in Boone peaked in 2003 with 339 units permitted, but for the last 37 years there has always been some development either in Boone or elsewhere in the county. Figure 6 shows the number of approved building permits since 1980 for the town and for the remainder of the county for multi‐family structures of five or more units. None have been permitted so far in 2018.

Elsewhere in Watauga County 363 344 Boone Town 273 273 252 203 159 146 136 130 117 111 99 98 97 94 87 84 77 72 66 66 64 60 56 50 42 42 39 36 36 30 30 25 21 21 21 16 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 All Multi‐Family Building Permits for Boone and the remainder of Watauga County Source: SOCDS Building Permit Database

Figure 6: Multi‐Family Building Permit Approval History Watauga County’s planner’s office is not aware of any new large multi‐family projects in the county be‐ yond the boundaries of the town of Boone. In the Town of Boone, however, according to Senior Planner Christy Turner, there are three projects under consideration: Rivers Walk, Shadowline, and the Forum.

The Rivers Walk3 development on Poplar Grove Rd is in a conditional district meaning that the owner— Glenn Weaver—needed to obtain a zoning variance for the property, demonstrating limited impact on nearby residential areas. Plans call for 145 apartments with 380 beds (eight studios, nine one‐bedrooms, 83 two‐bedrooms, seven three‐bedrooms, 35 four‐bedrooms and nine four‐bedroom, two‐story apart‐ ments). Since late 2016 the project appears to be stalled with revisions required before a final Planning Commission approval, and an estimated completion date is not available.

3 https://www.wataugademocrat.com/news/revised-rivers-walk-plan-to-be-reviewed-by-town/article_40da11df-3b07-52fd-acde-fdd8874429ab.html

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OFF-CAMPUS MARKET

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

The Shadowline Drive4 site of 7.84± acres, formerly a lingerie manufacturing plant that was demolished in 2016, at one point in 2013 was given zoning approval for 190 units with 457 bedrooms as well as com‐ munity and retail spaces. Progress is slow: the original developer has left the project and a new one may be forthcoming. The project has yet to break ground and the project timeline is still indeterminate.

The proposed Forum on East King Street5, which would replace the Boone Trail Motel, would have 42 one‐bedroom apartments. The owners attribute their interest in the project to declining interest in mo‐ tels; it is under construction and retaining walls have been poured. Other activity includes permitting for one‐off unit upgrades or renovation and the final buildout of Skyline Terrace Units previously planned and approved. Skyline Terrace does not offer individual leases and is aimed at young professionals as well as students. Six buildings are complete and two under way for a January 2019 opening; the total number of units will be 184 upon completion. The Town Council, however, has made it known that they favor no new student housing in Boone for the time being, evidently one of the reasons the Cottages was located beyond the Town boundary. Conclusion The student housing market in Boone is fully occupied and land constraints challenge any new entrants. While there are some projects in the pipeline that could eventually add some student‐oriented beds to the market, there is little concern among property managers that this will have an impact on their opera‐ tions. Similarly, Appalachian’s additional beds coming online by 2025 are unlikely to find these new de‐ velopments of any threat.

4 https://www.wataugademocrat.com/news/old-shadowline-plant-demolished-site-under-contract/article_b21ac66b-1553-5ed1-a39f- 292b0983aae4.html

5 https://www.wataugademocrat.com/main_street/boone-trail-motel-property-seeks-redevelopment-to-mixed-use-space/article_fc5eaf8b-0af8-5d1a- af51-9a22584e291c.html

PAGE 12

PEER INSTITUTION ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

PEER INSTITUTION ANALYSIS Overview Appalachian considers UNC Charlotte, UNC Greensboro, UNC Wilmington, and Western Carolina Univer‐ sity as relevant housing peer institutions. Key findings include: . Appalachian has the lowest‐cost room and board rates in comparison to its peers, although the NC Promise gives Western Carolina the lowest total cost of attendance. . Appalachian’s current unit mix is more heavily weighted towards traditional‐style units. Subse‐ quent to completion of the plan in 2025, however, its percentage of traditional units will be much more in line with peers. Capacity and Occupancy Headcount enrollment and housing capacity for fall 2018 is shown in Figure 7.6 Appalachian has more enrolled students than UNC Wilmington or Western Carolina and more housing capacity as a percentage of enrollment than UNC Greensboro or UNC Wilmington. With 300‐400 more beds, Appalachian would be second to UNC Charlotte in capacity, surpassing UNC Greensboro, but would remain second to Western Carolina in terms of beds as a percentage of enrollment.

29,710

20,106 19,108 16,747

11,639

21%; 6,142 30%; 5,679 29%; 5,732 25%; 4,148 39%; 4,533

Appalachian State UNC Charlotte UNC Greensboro UNC Wilmington Western Carolina University University

Figure 7: Fall 2018 Overall Headcount Enrollment and Housing Bed Capacity

6 For the peer analysis, MGT uses the full university headcount figures as published on the institutions’ websites. These figures typically include full- and part-time students, main-campus and distance learners, and graduate students and undergraduates.

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PEER INSTITUTION ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

With occupancy of 100% in fall 2018, Appalachian was the same as two peers, UNC Greensboro and West‐ ern Carolina, that also were at 100%. UNC Wilmington was almost full at 99%, and UNC Charlotte had a number of vacancies perhaps to halls coming offline this year, at 89%. Housing Cost As Table 3 shows, there Appalachian and Western Carolina have lower rates than the three UNC cam‐ puses. UNC Charlotte and Western Carolina have the most rate differentiation among their unit offerings.

Traditional Semi‐Suites 1‐BR Suites Studio Apts 2‐BR Apts 4‐BR Apts (Community Bath) (Room w/ Bath) Apts Private Shared Private Private Shared Private Shared University Singles Doubles Singles Doubles Singles Doubles BR BR BR BR BR BR BR Appalachian State University $2,235 $2,600 $2,700 $2,305 $2,650 $2,488 $2,685 UNC Charlotte $4,265 $3,185 $4,415 $4,265 $4,025 $5,200 $4,295 $4,315 $3,500 $4,295 $4,120 $4,445 $4,420 $3,605 $4,355 $4,185 $4,475 $4,420 $4,205 $4,775 $4,425 $4,310 $4,815 $4,535 $4,420 $4,910 $4,610 $4,915 $4,635 $4,660 $4,755 $4,790 $4,900 $4,970 UNC Greensboro $2,691 $3,631 $3,386 $3,631 $3,386 $3,896 $3,248 $4,166 $3,681 UNC Wilmington $2,757 $3,800 $3,119 $3,340 Western Carolina University $3,121 $2,398 $3,292 $2,586 $3,241 $2,630 $3,050 $2,549 $3,471 $2,971 $3,303 $2,803 $3,306 $3,020 $3,452 $3,053 $3,616 $3,080 $3,726 $3,235 Table 3:Housing Rates by Unit Type Housing Unit Mix As Figure 8 shows, Appalachian currently has the most traditional‐style rooms of the peer group, although after completing the phased replacement plan, they will have the least except for UNC Charlotte. UNC Greensboro and UNC Wilmington have mixes favoring apartments. UNC Charlotte has the most full suites, with a living area in the unit without a kitchen.

PAGE 14

PEER INSTITUTION ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

Traditional Semi‐Suite Suite Apartment

2022 Appalachian 33% 59% 9%

2018 Appalachian 66% 29% 5%

Charlotte 21% 6% 43% 30%

Greensboro 49% 11% 7% 33%

Wilmington 34% 14% 53%

Western 37% 49% 7% 7%

Figure 8: Peer Institution Unit Mix Cost of Attendance Appalachian costs less to attend than its peers except Western Carolina; its room and board are both lower than all peers. Appalachian’s tuition, however, is higher than all peers, as Figure 9 shows. Beginning in fall 2018, Western Carolina students benefit from the NC Promise Tuition Plan, which sets the cost of tuition at $500 per semester for in‐state students. The system instituted this plan to increase educational access, reduce student debt, and grow North Carolina’s economy. Elizabeth City State University and UNC Pembroke also benefit from the NC Promise plan, which asserts that “every North Carolinian lives within 150 miles of a NC Promise university.”7 In comparison, as this suggests, Western Carolina has more of a regional focus while Appalachian is more of a destination university.

7 NC Promise Tuition Plan,

PAGE 15

PEER INSTITUTION ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

Room Board Tuition & Fees

Western $4,796 $4,254 $1,000 $10,050

Wilmington $5,514 $3,660 $7,091 $16,265

Greensboro $5,382 $3,636 $7,854 $16,872

Charlotte $6,370 $4,340 $7,044 $17,754

Appalachian $4,470 $2,714 $7,652 $14,836

Figure 9: Appalachian and Peers' Room, Board, and Tuition and Fees Housing Changes Appalachian is not the only campus planning housing changes. UNC Charlotte plans to replace two aging high‐rises removed from service this year. UNC Greensboro is considering some housing in its Millennial Campus planning, now in its early stages. UNC Wilmington will open new housing in fall 2020. Western Carolina will open a new 600‐bed hall next fall. Upper-Class Retention Appalachian houses 99% of its first‐time freshmen and 33% of all undergraduates; all peers house a smaller percentage of freshmen, but Western Carolina houses a larger percentage of undergraduates, as Figure 10 shows.

First‐time, first‐year (freshman) students Undergraduates 99% 97% 90% 79% 78%

48%

33% 32% 24% 22%

Appalachian State UNC Charlotte UNC Greensboro UNC Wilmington Western Carolina University University

Figure 10: Percentages Housed, First‐Time Freshmen and All Undergraduates

PAGE 16

PEER INSTITUTION ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

Freshmen make up 58% of Appalachian’s housing residents, more than any peer except UNC Wilmington. UNC Greensboro has the highest percentage of upper‐class students living in housing, with 59%, as Figure 11 shows. Referring to Figure 8 above, while Appalachian (until 2022) and UNC Greensboro must assign upper‐class students to traditional halls, UNC Wilmington must assign freshmen to apartments.

42% 39% 54% 59% 57%

Upper‐Class 58% 61% Freshmen 46% 41% 43%

Appalachian State UNC Charlotte UNC Greensboro UNC Wilmington Western Carolina University University

Figure 11: Freshmen and Upper‐Class students as Percentages of All Housing Residents

PAGE 17

SURVEY REVIEW AND DEMAND ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

SURVEY REVIEW AND DEMAND ANALYSIS Overview In 2017, Brailsford and Dunlavey (B&D), a nationally‐recognized program management and consulting firm, provided Appalachian with a Student Housing Demand Assessment.8 Based on enrollment data and projections provided by Appalachian,9 responses to a student survey, and related analyses, B&D used its Demand‐Based Programming model to quantify Appalachian’s total on‐campus housing needs. B&D re‐ gards their proprietary student housing demand model as a premier planning tool; financial institutions routinely rely upon this model in the underwriting of major capital projects. MGT uses a somewhat similar approach and was able to review and validate B&D’s conclusions. Enrollment Growth With about 15% undergraduate main campus enrollment growth forecast by the university over the fol‐ lowing eight years, B&D found that by fall 2025, Appalachian would have demand for 2,367 more beds than their fall 2018 capacity. Assuming overall demand remained consistently in the range of 41% to 42% of enrollment, as Table 4 shows, the net new demand beyond capacity grows by 75% over the same eight‐ year period. The P3 Project reduces this demand deficit by almost 300 beds.10

Projected Appalachian Net Demand: Bed Appalachian On‐ Projected Deficit Academic Undergraduate Main On‐Campus Bed Surplus or Campus Bed Supply with Completed Year Campus Enrollment Supply (Deficit) with Completed Project Project 2018–19 16,767 5,679 (1,227) 5,679 (1,277) 2019–20 17,218 5,679 (1,518) 5,679 (1,518) 2020–21 17,609 5,679 (1,693) 5,912 (1,460) 2021–22 17,945 5,679 (1,820) 5,852 (1,647) 2022–23 18,196 5,679 (1,892) 5,971 (1,600) 2023–24 18,563 5,679 (2,027) 5,971 (1,735) 2024–25 18,952 5,679 (2,185) 5,971 (1,893) 2025–26 19,357 5,679 (2,367) 5,971 (2,075) Table 4: B&D Enrollment and Demand Projections before and with Planned Project Demand by Classification B&D’s analysis in Table 5 shows that while the potential capture rate for sophomores is less than half that of freshmen, they are responsible for two‐thirds as much demand as freshmen due to their higher head‐ count. Based on projections B&D obtained from the university, overall demand will grow by almost 600 beds from 2020 to 2024. Fall 2018 full‐time enrollment totaled 17,291, with Appalachian’s latest

8 Brailsford & Dunlavey, Student Housing Demand Assessment, Appalachian State University, November 2017 | Report

9 B&D used the latest available enrollment projections when their assessment was published in 2017. Appalachian has since updated projections based on fall 2017 and fall 2018 actual headcounts and other factors. B&D provided MGT with revised tables reflecting the university’s latest enrollment projections.

10 These figures exclude the 12 staff/faculty beds included in the P3 Project

PAGE 18

SURVEY REVIEW AND DEMAND ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE projections showing an increase to 17,809 by 2020. Large sophomore enrollment includes students trans‐ ferring to Appalachian after freshman year elsewhere (in 2018 there were 821 lower division transfer students). The junior headcount may seem low in comparison to seniors because students may remain seniors for two or more years until they accumulate enough credits to meet graduation requirements.

2020‐21 2024‐25 Enrollment Potential Full‐time Maximum Potential Full‐time Maximum Potential Classification Capture Rate Enrollment Demand Enrollment Demand Freshman 99% 3,435 3,405 3,481 3,450 Sophomore 46% 4,857 2,246 5,045 2,333 Junior 27% 4,235 1,142 4,399 1,186 Senior 12% 4,418 518 4,589 538 Graduate / Professional 9% 863 62 893 64 Total 41% 17,809 7,372 18,408 7,571 Existing Bed Count 5,679 5,679

Net Demand (Surplus / (Deficit) ) (1,567) (1,693)

Table 5: B&D Demand by Class Level, 2020‐01 and 2024‐25 Academic Years Reconciliation of Demand and Supply However, B&D determined that demand was mismatched with the current unit configurations Appala‐ chian supplies, as Figure 12 shows. Fewer students would prefer traditional beds and more would prefer semi‐suite, full suite, or apartment beds.

Supply Demand

3,656 3,324

1,599 1,510 1,086 849 284 0

Traditional Semi‐Suite Suite Apartment

Figure 12: B&D Comparison of Unit Mix Supply and Demand To address the disparity between supply and demand, B&D recommends that Appalachian reduce the number of traditional beds and increase in the numbers of semi‐suite and apartment beds. Since Appala‐ chian has a freshman living requirement and follows the conventional residence life theory that traditional rooms are developmentally appropriate for freshmen, capacity for traditional‐style units can still exceed demand. Including demolition of the 1,797 traditional beds, B&D recommended a five‐year plan that pro‐ vides 220 new apartment beds and 1,980 new semi‐suite‐style beds that will also suit freshmen program‐ matically while being more consistent with their preference as well as providing the flexibility to appeal to some sophomores, juniors, and seniors. As Figure 13 shows, B&D recommends increasing the total number of beds while still leaving some of the demand unmet.

PAGE 19

SURVEY REVIEW AND DEMAND ANALYSIS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

2025 Supply 2025 Recommended Supply 2025 Projected Demand 3,789 3,656 3,579

1,908 1,599 1,711 1,123 963 504 284 0 0

Traditional Semi‐Suite Suite Apartment

Figure 13: B&D Recommended Supply and Demand by Unit Type Appalachian’s P3 Housing project deviates from B&D’s recommendations in two ways. While B&D recom‐ mended 1,980 semi‐suite beds and 220 apartment beds (2,200 total), as Figure 14 shows, the P3 Project will deliver 2,101: 232 apartment beds and 1,857 semi‐suite‐style beds (with 12 staff/faculty apartments). While B&D recommended a five‐year phasing plan, the P3 Project will be complete in three years. Neither change makes any substantial difference in the feasibility of the plan.

Existing Supply 2022‐23 Supply with Completed Project 2022‐23 Projected Demand

3,751 3,676 3,495

1,954 1,638 1,704 1,222 968 522 290 0 0

Traditional Semi‐Suite Suite Apartment

Figure 14: P3 Project Supply and Demand by Unit Type Conclusion The demand analysis has been reviewed by MGT consultants who find the approach and conclusions sound based on B&D’s Demand‐Based Programming model. MGT concurs that the resulting demand es‐ timation is reasonable and consistent with the results of MGT’s off‐campus analysis. While addressing the shortfall of capacity to meet demand by adding new beds, the plan makes Appalachian’s housing system more appealing in terms of the unit types offered. Although there will still be many students who would prefer to live on campus after the plan is complete, the increased capacity means they will be at least as well off as they are today with fewer beds available.

PAGE 20

ATTACHMENTS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

ATTACHMENT 1: MAJOR OFF-CAMPUS RENTAL PROPERTIES

Appalachian State University Major Properties

Major Apartments

The Cottages of Boone Highland Crossing Mountaineer Village The Standard at Boone University Highlands The Village of Meadowview

University

Appalachian State University Appalachian State University AppState2018 OCMA.xlsx STUDENT HOUSING MARKET STUDY

Major Property Listing

Efficiency One Bedroom Two Bedroom Three Bedroom

Rent/ Rent/ Rent/ Rent/ Apartment Complex Address Phone Rent SF SF Rent SF SF Rent SF SF Rent SF SF The Cottages of Boone 615 Fallview Ln (828) 865‐1800 $1,005 594 $1.69 $690 1,346 $0.51 $670 1,346 $0.50 $655 1,105 $0.59 Highland Crossing 153 Crossing Way (828) 262‐3434 $625 1,200 $0.52 Mountaineer Village 517 Yosef Dr (828) 355‐6107 $620 1,200 $0.52 The Standard at Boone 850 Blowing Rock Rd (828) 865‐1101 $968 399 $2.42 $1,100 550 $2.00 $838 749 $1.12 $800 1,130 $0.71 $1,070 395 $2.71 $1,125 611 $1.84 $840 775 $1.08 $1,065 562 $1.90 $888 907 $0.98

University Highlands 289 Ambling Way (828) 263‐0100 $560 780 $0.72 The Village of Meadowview 304 Madison Ave (828) 278‐7983 $633 962 $0.66 $613 1,263 $0.49 High $1,070 562 $2.71 $1,125 611 $2.00 $888 962 $1.12 $800 1,346 $0.71 Low $968 395 $1.90 $1,005 550 $1.69 $560 749 $0.66 $613 1,105 $0.49 Median $1,065 399 $2.42 $1,100 594 $1.84 $838 780 $0.98 $655 1,200 $0.52

Page 1 of 4 1/11/2019 Appalachian State University AppState2018 OCMA.xlsx STUDENT HOUSING MARKET STUDY

Major Property Listing

Four BedroomFive Bedroom Lease Terms Utilities Included

Rent/ Rent/

Page 2 of 4 1/11/2019 Appalachian State University AppState2018 OCMA.xlsx STUDENT HOUSING MARKET STUDY

Major Property Listing

Unit Amenities Community Amenities

WD Pat/ Conn Club‐ Play‐ Fitness Apartment Complex Furn. Balc DW AC Only WD Pool house ground Ctr Volley Tennis Laundry Pets The Cottages of Boone AYY YNY Y Y N Y N N N Y

Highland Crossing NNY Y N Y N Y N Y N N N Y Mountaineer Village NNY Y N Y Y Y N Y Y N N Y The Standard at Boone YNY Y NY Y Y N Y N N N Y

University Highlands YYYYNYY Y N Y Y Y N N The Village of Meadowview ANY Y N Y Y Y N Y N N N Y Y = Yes N = No A = Available

10 12 12 6 12 11 12 6 12 8 7 6 11

Page 3 of 4 1/11/2019 Appalachian State University AppState2018 OCMA.xlsx STUDENT HOUSING MARKET STUDY

Major Property Listing

Miles by car from Occ‐ Sanford upan‐ Year # of Apartment Complex Mall cy built beds Notes The Cottages of Boone 3.2 99% 2012 894 Cardinal

Highland Crossing 1.4 100% 2013 204 Keuster Mountaineer Village 2.3 100% 2005 575 >25% preleased; 10 Federal The Standard at Boone 0.7 100% 2016 500 38.75% (28.36% returners)

University Highlands 3.1 100% 2000 768 1/14 start preleassing Owned by ASHC tied to university The Village of Meadowview 2.3 100% 2006 440 30% preleased; 10 Federal 100% ###### 3,381 538

Page 4 of 4 1/11/2019 ATTACHMENTS

BEYOND OWNERS GROUP  STUDENT HOUSING STUDY FOR APPALACHIAN STATE

ATTACHMENT 2: PEER INSTITUTION DATA TABLES

Appalachian State University AppState2018 Peers.xlsx STUDENT HOUSING MARKET STUDY

Housing Data ‐ Beds and Occupancy

NOTES: Data for 2018 semester unless noted otherwise. Trad. # Beds = the number of spaces rented by the bed in traditional‐style (community bath) residence halls. Semi‐Suite # of Beds = the number of spaces rented by the bed in semi‐suite‐style (private or shared bath; no living area) residence halls. Suite # of Beds = the number of spaces rented by the bed in suite‐style (shared living area; no kitchen) residence halls. Apt. # of Beds = the number of spaces rented by the bed in apartments rented by‐the‐bed with individual leases. Information is current for the 2018 semester based on institutions' Web sites as posted in 2018.

Semi‐ Apt. Beds/Units Trad. Suite Suite Apt. # Headcount % of Fall 2018 Demand College/University # Beds # Beds # Beds # Beds Units Enrollment Enrollment Occupancy Trends Newest Housing / Plans 2020‐22 3‐phase plan to replace 1,797 Appalachian State University 3,751 1,638 0 290 0 19,108 30% 100% increasing traditional beds with 2,100 semi‐suite beds UNC Charlotte 1,320 350 2,658 1,814 0 29,710 21% 89% Old halls removed mid‐2018‐19 AY or after.

Housing was 100%+ in fall 2018. May include UNC Greensboro 2,804 609 403 1,916 0 20,106 29% 100% increasing apartments in planned Millenial Campus UNC Wilmington 1,401 568 0 2,179 0 16,747 25% 99% increasing New housing to open fall 2020

Western Carolina University 1,676 2,223 300 334 0 11,639 39% 100% 600‐bed hall to open fall 2019

Page 1 of 4 1/11/2019 Appalachian State University AppState2018 Peers.xlsx STUDENT HOUSING MARKET STUDY Housing Data ‐ Room Rates per Academic Year Note: Information is current for the 2018 semester based on institutions' Web sites as posted in Fall 2018. Traditional Semi‐Suites 1‐BR (Community Suites Studio Apts 2‐BR Apts 4‐BR Apts (Room w/ Bath) Apts Bath) Single Privat Shared Privat Privat Shared Privat Shared University Singles Doubles Doubles Singles Doubles s e BR BR e BR e BR BR e BR BR Appalachian State University $2,235 $2,600 $2,700 $2,305 $2,650 $2,488 $2,685 UNC Charlotte $4,265 $3,185 $4,415 $4,265 $4,025 $5,200 $4,295 $4,315 $3,500 $4,295 $4,120 $4,445 $4,420 $3,605 $4,355 $4,185 $4,475 $4,420 $4,205 $4,775 $4,425 $4,310 $4,815 $4,535 $4,420 $4,910 $4,610 $4,915 $4,635 $4,660 $4,755 $4,790 $4,900 $4,970 UNC Greensboro $2,691 $3,631 $3,386 $3,631 $3,386 $3,896 $3,248 $4,166 $3,681 UNC Wilmington $2,757 $3,800 $3,119 $3,340 Western Carolina University $3,121 $2,398 $3,292 $2,586 $3,241 $2,630 $3,050 $2,549 $3,471 $2,971 $3,303 $2,803 $3,306 $3,020 $3,452 $3,053 $3,616 $3,080 $3,726 $3,235 Low $3,121 $2,235 $3,292 $2,586 $3,241 $2,630 $3,050 $2,549 $5,200 $3,896 $2,700 $3,248 $2,971 High $4,420 $3,605 $4,415 $3,386 $4,970 $4,420 $3,050 $2,549 $5,200 $4,166 $2,700 $4,915 $2,971 Median $4,290 $2,757 $3,534 $2,912 $4,535 $4,153 $3,050 $2,549 $5,200 $4,031 $2,700 $4,445 $2,971 Page 2 of 4 1/11/2019 Appalachian State University AppState2018 Peers.xlsx STUDENT HOUSING MARKET STUDY

Housing Data ‐ Policies, Utilities, & Amenities

Policies Utilities Food Recreation Other ilities College/ University Notes Tennis C Store Vending Volleyball Basketball Lease Term Study Room Computer Lab Fitness Center In Room Cable Swimming Pool Furnished Units TV/Game Room Local Telephone Utilities Included Laundry Fac Ethernet/Internet Community Kitchen On‐site Food Service Mandatory Meal Plan On‐Campus Living Rqmt.

Appalachian State University Residence Halls Y Y YYYYSNYYYYYNNNNNY YAYFR must live on campus in residence hall Apartments by Bed N/AN YYYYNNYNNYYNNNNNY YAY UNC Charlotte Residence Halls N Y YYYYNNYSNSSNNNNNY SAY2 buildings allow pets Apartments by Bed N N YYYYNNYSNYNNNNNNY YAY UNC Greensboro Residence Halls N Y YYYYNNSYNYYNNNNNY YAY Apartments by Bed N Y YYYYSSSNNYYNNNNNY YAY UNC Wilmington Residence Halls Y Y YYYYNNYYN*YYNNNNNY YAY* No computer labs but some have iPrint Apartments by Bed Y N YYYYSSYNN*YYNNNNNY Y12mo Some apartments have AY leases Western Carolina University Residence Halls Y Y YYYYNSYYNYYNNSNSYYAYOnly first year students must get meal plan Apartments by Bed Y Y YYYYNNYNNYYNNSNSYYAY

Page 3 of 4 1/11/2019 Appalachian State University AppState2018 Peers.xlsx STUDENT HOUSING MARKET STUDY

Housing Data ‐ Annual Cost Median traditional double, if available, otherwiswe median of all units available. Tuition College/University Room Board & Fees Total Meal Plan Notes

Appalachian State University $4,470 $2,714 $7,652 $14,836 Standard declining balance card plan. No AYCE plans.

UNC Charlotte $6,370 $4,340 $7,044 $17,754 185/300 meal plan Sanford traditional double

UNC Greensboro $5,382 $3,636 $7,854 $16,872 Spiro's 15 meal plan traditional double

UNC Wilmington $5,514 $3,660 $7,091 $16,265 All Access 5 meal plan traditional double

Western Carolina University $4,796 $4,254 $1,000 $10,050 175 Block Plan

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APPENDIX B

CASH FLOW PROJECTION

FISCAL YEAR ENDING JUNE 30, 2021 2022 2023 2024 2025

Gross Academic Year Rental Revenue $3,693,754 $3,804,567 $3,918,704 $4,036,265 $4,157,353 LESS: Vacancies (184,688) (190,228) (195,935) (201,813) (207,868) Net Academic Year Rental Revenue 3,509,066 3,614,338 3,722,768 3,834,451 3,949,485 Summer Campus & Conferences 0 125,528 129,294 133,173 137,168 Other Income 9,775 10,069 10,371 10,682 11,002 University Lease Payment 288,873 693,925 693,925 873,925 871,725 Debt Service Reserve Fund Earnings 20,396 48,950 48,950 48,950 48,950 Total Revenues $3,828,111 $4,492,810 $4,605,308 $4,901,181 $5,018,330 Facility & Asset Management Expenses $73,375 $75,576 $77,844 $80,179 $82,584 Common Area Electricity 65,028 66,979 68,988 71,058 73,190 Unit Utilities 221,187 227,823 234,657 241,697 248,948 Property Insurance 74,553 76,790 79,093 81,466 83,910 Borrower's Fees & Expenses 26,391 28,125 28,968 29,837 30,732 Asset Management Fee 17,594 18,750 19,312 19,892 20,488 Issuer's Fee 18,506 18,419 18,305 18,117 17,898 Bond Related Fees 20,000 20,600 21,218 21,855 22,510 Total Operating Expenses $516,634 $533,060 $548,385 $564,100 $580,261 Net Operating Income $3,311,477 $3,959,750 $4,056,923 $4,337,081 $4,438,70 Annual Debt Service 1,204,844 3,184,219 3,263,634 3,494,764 3,575,656 Fixed Charges Coverage Ratio 2.75 1.24 1.24 1.24 1.24 Break-Even Occupancy 37.97% 74.62% 74.76% 74.13% 74.26% Repair & Replacement Fund Deposit 129,210 133,086 137,079 141,191 145,427 Operations Contingency Fund Deposit 1,977,423 642,445 656,210 701,126 716,986 Operations Contingency Reserve 129,158 4,106 3,831 3,929 4,040 Surplus Fund Deposit 1,848,264 638,338 652,379 697,197 712,946 Secondary Reserve Fund 64,310 66,239 68,226 70,273 72,381 University Provided Services Administration and IT $113,174 $116,569 $120,066 $123,668 $127,378 Custodial (Additional Labor) 12,673 13,053 13,445 13,848 14,264 Maintenance 93,208 96,004 98,885 101,851 104,907 Residence Life 7,788 8,022 8,262 8,510 8,765 Security 2,968 3,057 3,148 3,243 3,340 Waste Disposal 7,558 7,785 8,018 8,259 8,506 Personnel Costs 780,439 797,955 805,272 829,430 854,313 Total University Contribution $0 $470,346 $472,944 $461,885 $480,908

Ground Rent Payment $766,146 $0 $0 $0 $0

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APPENDIX C

DEFINITIONS

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APPENDIX C

DEFINITIONS

Certain words and terms used in this Official Statement are defined herein. In addition to the words and terms defined elsewhere herein, the following words and terms are defined terms in this Official Statement.

“Accountant” means initially, initially, RKL, LLP, Lancaster, Pennsylvania, and thereafter, an independent certified public accountant or firm of independent certified public accountants (which may be the accountant or firm of accountants retained by the Borrower) and reasonably acceptable to each Bond Insurer.

“Accounts” means, collectively, all of the accounts within the Funds created pursuant to the Indenture (each, an “Account”).

“Acquisition Fee” means the acquisition fee required to be paid to Beyond Owners Group under the Ground Lease in an amount equal to twenty-five (25) basis points of the principal amount of the Series 2019 Bonds or any Additional Bonds issued in connection with the financing of the Project, which will be payable out of the proceeds of the taxable portion of the Series 2019 Bonds or any Additional Bonds.

“Act” means §§66.0301, 66.0303, and 66.0304 of the Wisconsin Statutes, as amended.

“Additional Bonds” means any additional parity Bonds authorized to be issued by the Authority pursuant to the terms and conditions of the Indenture.

“Additional Loan Payments” means the Loan Payments payable by the Borrower to the Authority pursuant to the Loan Agreement that are described in APPENDIX “D” hereto, “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS,” under the subheading “THE LOAN AGREEMENT - Loan Payments and Other Amounts Payable – Additional Loan Payments.”

“Additional Notes” means any promissory notes issued by the Borrower in connection with Additional Bonds.

“Additions or Alterations” means modifications, repairs, renewals, improvements, replacements, alterations, additions, enlargements, or expansions in, on, or to the Project, including any and all machinery, furnishings, and equipment therefor, but excluding Offsite Improvements.

“Affiliate” means any Person (i) directly or indirectly controlling, controlled by, or under common control with the Borrower or (ii) a majority of the members of the Directing Body of which are members of the Directing Body of the Borrower. For purposes of this definition, control means with respect to: (a) a corporation having stock, the ownership, directly or indirectly, of more than fifty percent (50%) of the securities (as defined in §2(1) of the Securities Act) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the directors of such corporation; (b) a non-profit corporation not having stock, having the power to elect or appoint, directly or indirectly, a majority of the members of the Directing Body of such corporation; or (c) any other entity, the power to direct the management of such entity through the ownership of at least a majority of its voting securities or the right to designate or elect at least a majority of the members of its Directing Body, by contract or otherwise. For the purposes of this definition, “Directing Body” means with respect to: (x) a corporation having stock, such corporation’s board of directors and owners, directly or indirectly, of more than fifty percent (50%) of the securities (as defined in §2(1) of the Securities Act) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the directors of such corporation (both of which groups will be considered a Directing Body); (y) a non-profit corporation not having stock, such corporation’s members if the members have complete discretion to elect the corporation’s directors, or the corporation’s directors if the corporation’s members do not have such discretion; or (z) any other entity, its governing body or board. For the purposes of this definition, all references to directors and members will be deemed to include all entities performing the function of directors or members however denominated.

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“Agreement Term” means the term of the Loan Agreement specified in the Loan Agreement, from its execution and delivery until July 1, 2058, unless terminated prior thereto pursuant to the provisions of the Loan Agreement.

“Annual Budget” means the annual budget of the Borrower required by the Loan Agreement.

“Annual Debt Service” means the amount required to pay all principal of and interest on a Series of Bonds in any Bond Year. For purposes of calculating the Annual Debt Service on a Series of Bonds the interest rate borne by which is not fixed to the maturity thereof on any date, for any period during which a Qualified Exchange Agreement is in effect, the interest payable on such Series of Bonds is deemed to be equal to the fixed periodic sum payable by the Borrower under such Qualified Exchange Agreement plus any fees paid to any credit enhancer and/or remarketing agent in connection therewith and for any period during which such a Qualified Exchange Agreement is not in effect, such Series of Bonds will be treated as if it bears interest at the 25 Revenue Bond Index as published by The Bond Buyer on the date of determination plus fifty-hundredths percent (0.50%) per annum.

“Annual Period” means the 12-month period commencing on July 1 of each calendar year and ending on June 30 of the immediately succeeding calendar year.

“Architect” means Niles Bolton Associates, Inc. a corporation organized under the laws of the State of Georgia, and its successors and assigns.

“Architect’s Contract” means the Standard Form of Agreement between Owner and Architect for a Complex Project (AIA Document B103-2017) dated as of February 1, 2019, between the Developer and the Architect, and any amendments thereof and supplements thereto.

“Asset Management Agreement,” with respect to the Series 2019 Bonds, means (1) the Asset Management Agreement dated as of February 1, 2019, between the Borrower, as the lessee under the Ground Lease, and the University, as Ground Lessor, detailing the Borrower’s obligation to maintain, repair and replace the Student Housing Facilities, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof and (ii) any asset management or similar agreement between the Borrower or the University, as applicable, and any successor asset manager relating to the maintenance, repair and replacement of the Student Housing Facilities and any additional project acquired, constructed, furnished, and equipped with the proceeds of Additional Bonds, in form and substance acceptable to each Bond Insurer, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof.

“Assignment of Contracts,” with respect to the Series 2019 Bonds, means the Assignment of Contracts and Agreements dated February 1, 2019, by the Borrower in favor of the Trustee, as the same may be amended and/or supplemented from time to time as permitted hereby (including to provide for the issuance of Additional Bonds) and thereby, pursuant to which the Borrower collaterally assigns to the Trustee its interest in the Development Agreement, the Parking Facility Lease, the Asset Management Agreement, the Developer Collateral Assignment and the Operating Agreement and all other accounts, books, records and any other property relating or referring to any of the foregoing, and all proceeds of any and all of the foregoing and, to the extent not otherwise included in the foregoing, all payments under insurance (whether or not the Trustee is the loss payee thereof), or any indemnity, warranty, or guaranty, payable by reason of damage to, loss with respect to, any of the foregoing.

“Audit Report” means an unqualified audit report resulting from an audit conducted by an Accountant in conformity with generally accepted auditing standards prepared in accordance with GAAP.

“Authority” means the Public Finance Authority and its successors and assigns.

“Authority Additional Payments” means the payments the Borrower shall pay to the Authority or to the Trustee, as applicable, collectively:

(1) all taxes and assessments of any type or character charged to the Authority or to the Trustee affecting the amount available to the Authority or to the Trustee from payments to be received

C-2

under the Loan Agreement or in any way arising due to the transactions contemplated by the Indenture or by the Loan Agreement (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments); provided, however, the Borrower will have the right to protest any such taxes or assessments and to require the Authority, at the Borrower’s expense, to protest and contest any such taxes or assessments levied on them and that the Borrower will have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest, or contest would adversely affect the rights or interests of the Authority or the Trustee (the Trustee will cooperate with any protest by the Borrower or the Authority);

(ii) the fees and expenses of such accountants, consultants, attorneys, rebate analysts, and other experts as may be engaged by the Authority to prepare any audits, financial statements, reports, and/or opinions or to provide such other services required to be provided by the Authority under the Loan Agreement, the Indenture, or any of the other Bond Documents, including, but not limited to, any audit or inquiry by the Internal Revenue Service or any other governmental body; and

(iii) the Authority Annual Fee and the fees and expenses of the Authority or any agent or attorney selected by the Authority in connection with the performance of its duties under the Indenture or in the Loan Agreement and to act on its behalf in connection with the Loan Agreement, the Indenture, any of the other Bond Documents or the Bonds, including, without limitation, any and all expenses incurred in connection with the authorization, issuance, sale, and delivery of any Bonds or in connection with any litigation, investigation, inquiry, or other proceeding that may at any time be instituted involving the Loan Agreement, the Indenture, any of the other Borrower Documents, the Bonds, or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of the Borrower, its properties, assets, or operations or otherwise in connection with the administration of the Loan Agreement and of the Borrower Documents.

(each, an “Authority Additional Payment”).

“Authority Annual Fee,” with respect to the Series 2019 Bonds, means the fee payable in semi-annual installments on the six-month anniversary of the Closing Date and subsequently on the same day every six month thereafter, the amount of each of which shall be determined by multiplying (i) the principal amount of the Bonds Outstanding as of the last day of the calendar month preceding the date of payment by (ii) .03 percent (3 basis points) by (iii) one-half (1/2).

“Authority Closing Expenses” means, collectively, (i) the Authority Issuance Fee (less, if applicable, any application fee heretofore paid by the Borrower to the Authority) and (ii) attorneys’ fees incurred by the Authority in connection with the issuance of the Bonds.

“Authority Documents,” with respect to the Series 2019 Bonds, means, collectively, the Indenture, the Loan Agreement, the Tax Agreement, and the Bond Purchase Agreement.

“Authority Indemnified Persons” means, collectively, (i) the Sponsors, (ii) the Members, and (iii) each and all of the Authority’s, the Sponsor’s and the Member’s respective past, present, and future directors, board members, governing members, trustees, commissioners, elected or appointed officials, officers, employees, Authorized Signatories, attorneys, agents, and advisers (including counsel and financial advisers), and each and all of their respective heirs, successors, and assigns (each, an “Authority Indemnified Person”).

“Authority Issuance Fee” means the amount equal to $40,000 plus 0.05% of the par amount of the Bonds in excess of $20 million.

“Authorized Borrower Representative” means any person at the time designated to act on behalf of the Borrower by written certificate furnished to the Authority and the Trustee, containing the specimen signature of such person and signed on behalf of the Borrower by the President of Beyond Owners Group. Such certificate or any subsequent or supplemental certificate so executed may designate an alternate or alternates.

C-3

“Authorized Denominations,” with respect to the Series 2019 Bonds, means denominations of $5,000 and any multiple thereof (each, an “Authorized Denomination”).

“Authorized Developer Representative” means any person at the time designated to act on behalf of the Developer by written certificate furnished to the Borrower, the Authority, and the Trustee, containing the specimen signature of such person and signed on behalf of the Developer by its Manager. Such certificate or any subsequent or supplemental certificate so executed may designate an alternate or alternates.

“Authorized Manager Representative” means any person at the time designated to act on behalf of the Manager by written certificate furnished to the Authority and the Trustee, containing the specimen signature of such person and signed on behalf of the Manager by an authorized officer of the Manager. Such certificate or any subsequent or supplemental certificate so executed may designate an alternate or alternates.

“Authorized Signatory” means any officer, director, or other Person designated by resolution of the Board of Directors of the Authority (whether such resolution is adopted in connection with the issuance of Bonds or otherwise) or by the Authority’s Bylaws as an ‘Authorized Signatory’ empowered to, among other things, execute and deliver on behalf of the Authority the Indenture, the Authority Documents and the Bonds (collectively, the “Authorized Signatories”).

“Authorized University Representative” means any person at the time designated to act on behalf of the University by written certificate furnished to the Authority and the Trustee, containing the specimen signature of such person and signed on behalf of the University by an authorized officer of the University. Such certificate or any subsequent or supplemental certificate so executed may designate an alternate or alternates.

“Basic Loan Payments” means the Loan Payments payable by the Borrower to the Authority pursuant to the Loan Agreement that are described in APPENDIX “D” hereto, “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS,” under the subheading “THE LOAN AGREEMENT - Loan Payments and Other Amounts Payable – Basic Loan Payments.”

”Beneficial Owners,” if the Bonds are not held under the Book-Entry System, means, collectively, the Owners and, if the Bonds are held under a Book-Entry System, means, collectively, the Persons in whose names Bonds are recorded as beneficial owners of such Bonds with the Securities Depository (and while DTC is the Securities Depository, in the name of its nominee, Cede & Co.) or a Participant or an Indirect Participant, as the case may be, as established in writing by letter of such persons or entities to the Trustee (each, a “Beneficial Owner”).

“Beyond Owners Group” means Beyond Owners Group, Inc., a non-profit corporation organized and existing under the laws of the Commonwealth of Pennsylvania, and its successors and assigns.

“Bond Counsel” means Independent Counsel nationally recognized as experienced in matters relating to Tax-Exempt Bonds and reasonably acceptable to the Authority, the Borrower, and the Trustee.

“Bond Documents,” with respect to the Series 2019 Bonds, means, collectively, the Indenture, the Loan Agreement, the Series 2019 Notes, the Tax Agreement, the Leasehold Deed of Trust, the Security Agreement, the Assignment of Contracts, the Developer Collateral Assignment, the Bond Purchase Agreement, the Indemnity Letters, the Ground Lease, the Development Agreement, the Construction Agreement, the Architect’s Contract, the Continuing Disclosure Agreement, and the Borrower Financing Statements.

“Bond Fund” means the Fund of that name created in the Indenture.

“Bond Insurance Policy” means the Series 2019 Bond Insurance Policy and each other insurance policy guaranteeing the scheduled payment of premium of and interest on a series of Additional Bonds when due.

“Bond Insurer” means the issuer of any Bond Insurance Policy.

C-4

“Bond Insurer Default” means (a) with respect to the Series 2019 Bonds, a Series 2019 Bond Insurer Default, and (b) with respect to any Additional Bonds, the meaning set forth in a supplemental indenture relating to such Additional Bonds.

“Bond Payment Dates” means, collectively, the Interest Payment Dates and all dates on which Debt Service Payments will be payable on or in respect of any of the Bonds according to their terms and the terms of the Indenture, including without limitation, scheduled mandatory sinking fund redemption dates, dates of acceleration of the Bonds pursuant to the Indenture, optional redemption dates, extraordinary optional redemption dates, and stated maturity dates, so long as any Bonds are Outstanding (each, a “Bond Payment Date”).

“Bond Purchase Agreement,” with respect to the Series 2019 Bonds, means the Bond Purchase Agreement dated February 7, 2019, among the Authority, the Borrower, and the Underwriter.

“Bond Register” means the books for the registration of the Bonds and for the registration of the transfer of the Bonds kept and maintained by the Trustee as bond registrar.

“Bond Resolution,” with respect to the Series 2019 Bonds, means the resolution or resolutions adopted by the Authority authorizing the issuance and sale thereof, the security therefor, and the execution, delivery, and performance of the applicable Authority Documents.

“Bond Year” means the 12-month period beginning on July 2 of each calendar year and ending on July 1 of the immediately succeeding calendar year; provided that, the initial Bond Year shall begin on the Closing Date and end on July 1, 2019.

“Bondholders,” “Bondowners,” or “Owners” means the Persons in whose names any of the Bonds are registered on the Bond Register.

“Bonds” means, collectively, the Series 2019 Bonds and all Additional Bonds (each, a “Bond”).

“Book-Entry System” means the system of evidence and transfer of ownership of the Bonds maintained by the Securities Depository described in the Official Statement under the heading “THE SERIES 2019 BONDS – Book-Entry System for the Series 2019 Bonds.”

“Borrower” means Beyond Boone, LLC, a single member limited liability company organized under the laws of the State of Delaware, and its successors and assigns.

“Borrower Documents,” with respect to the Series 2019 Bonds, means the Loan Agreement, the Series 2019 Notes, the Tax Agreement, the Leasehold Deed of Trust, the Security Agreement, the Assignment of Contracts, the Bond Purchase Agreement, the Ground Lease, the Development Agreement, the Asset Management Agreement, the Borrower Indemnity Letter, the Continuing Disclosure Agreement and the Borrower Financing Statements.

“Borrower Financing Statements,” with respect to the Series 2019 Bonds, means the UCC-1 Financing Statements filed under the Security Agreement and the Assignment of Contracts.

“Borrower Indemnity Letter,” with respect to the Series 2019 Bonds, means the indemnity letter dated the Closing Date for the Series 2019 Bonds, from the Borrower to the Authority and the Underwriter, in the form attached as an exhibit to the Bond Purchase Agreement.

“Building 100” means the approximately 590-bed student housing facility to be located on the Millennial Campus of the University in the Project Jurisdiction, but does not include any Offsite Improvements.

“Buildings” means those certain buildings and all other facilities and improvements constituting part of the Project and not constituting part of the Equipment that are or will be located on the Property.

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“Business Day” means any day other than a Saturday, a Sunday, or a day on which banking institutions in the State of Wisconsin, in the State of North Carolina, or in the state where the Office of the Trustee is located are authorized or obligated by law to close or a day on which the New York Stock Exchange is closed.

“Calculation Date” means the last day of each Bond Year, commencing with the last day of the second (21’d) Bond Year, and the date on which a Series or a Subseries of Bonds are Discharged.

“Capitalized Interest” means amounts derived from the proceeds of Bonds deposited in the Capitalized Interest Account to pay interest on Bonds and interest earned on such amounts to the extent that such interest earned is required to be applied to pay interest on Bonds.

“Capitalized Interest Account” means the Account of the Bond Fund of that name created in the Indenture.

“Closing Date,” with respect to a series of Bonds, means the date of issuance and delivery thereof.

“Code” means the Internal Revenue Code of 1986, as amended. Reference herein to any specific provision of the Code will be deemed to include a reference to any successor provision or provisions to such provision and to any Regulations issued or proposed under or with respect to such provision or under or with respect to any predecessor provision of the Internal Revenue Code of 1954, as amended, to the extent any of the foregoing is applicable to the Bonds.

“Completion Date” means (a) with respect to the Series 2019 Project, the Series 2019 Completion Date and (b) any other such date of completion designated hereunder in connection with the financing of the Project through the issuance of Additional Bonds.

“Condemnation Fund” means the Fund of that name created in the Indenture.

“Construction Agreement,” with respect to the Series 2019 Project, means that certain Standard Form of Agreement between Owner and Contractor (AIA Document A102 – 2017) dated as of February 1, 2019, between the Developer and the General Contractor pursuant to which the General Contractor has agreed to construct the Series 2019 Project, and any amendments thereof and/or supplements thereto.

“Construction Contracts,” with respect to the Series 2019 Project, means the Development Agreement, the Construction Agreement, the Architect’s Contract, and the other contracts and agreements, if any, relating to the construction thereof and the Offsite Improvements between the Developer or the Borrower and the Architect, the General Contractor and construction professionals or suppliers of materials and Equipment.

“Construction Costs,” with respect to the Series 2019 Project, means all Costs of the Project that are properly payable to the appropriate contractors pursuant to the applicable Construction Contracts.

“Construction Fund” means the Fund of that name created in the Indenture.

“Construction Monitor” with respect to the Series 2019 Project, means Jones Lang LaSalle Americas, Inc., and its successors and assigns.

“Construction Period,” (a) with respect to the Series 2019 Project, means the Series 2019 Construction Period and (b) any other such period of construction designated hereunder in connection with the financing of the Project through the issuance of Additional Bonds.

“Continuing Disclosure Agreement” means the Continuing Disclosure and Dissemination Agent Agreement of even date with the Indenture, between the Borrower and the Dissemination Agent, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof and of the Indenture.

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“Contracts” means all contracts, licenses, instruments, undertakings, documents, or other agreements in or under which the Borrower may now or hereafter have any right, title, or interest, including, without limitation, any claim arising thereunder from misrepresentation or breach of warranty, and all such agreements that pertain to the lease, sale, construction, design, manufacture, or other disposition of any Equipment, fixtures, real property, or any interest in real property as any of the same may from time to time be amended or supplemented.

“Costs of the Project,” with respect to the Series 2019 Project means those costs and expenses in connection with the acquisition, construction, furnishing, and equipping thereof to be paid or reimbursed from the proceeds of the Series 2019 Bonds or any Additional Bonds including, but not limited to, the following:

(i) (a) the cost of the preparation of Plans and Specifications (including any preliminary study or planning thereof or any aspect thereof), (b) the cost of acquisition and construction thereof and all construction, acquisition, and installation expenses required to provide utility services or other facilities and all real or personal properties deemed necessary in connection therewith (including development, architectural, engineering, and supervisory services with respect to any of the foregoing), (c) Capitalized Interest on the Series 2019 Bonds during the applicable Construction Period and for such additional period as permitted by applicable law and as the Borrower, the Developer, and the Underwriter reasonably agree to be necessary for placing the Series 2019 Project in operation, and (d) any other costs and expenses relating to the acquisition, construction, and placing in service thereof, including start-up costs;

(ii) the purchase price of the Equipment in connection therewith, including all costs incident thereto, payment for labor, services, materials, and supplies used or furnished in site improvement and in the construction thereof, including all costs incident thereto, payment for the cost of the construction, acquisition, and installation of utility services or other facilities in connection therewith, payment for all real and personal property deemed necessary in connection therewith, payment of consulting and development fees in connection therewith, and payment for the miscellaneous expenses incidental to any of the foregoing items including the premium on any surety bond;

(iii) the fees or out-of-pocket expenses, if any, of those providing services with respect thereto, including, but not limited to, architectural, engineering, development, and supervisory services;

(iv) any other costs and expenses relating to the Series 2019 Project that constitute costs or expenses for which the Borrower may expend Bond proceeds, including, without limitation, during the applicable Construction Period, any Authority Annual Fee (which will be paid solely from proceeds of the Series 2019B Bonds), any Rating Agency fees and expenses, and any Trustee fees, but excluding Issuance Costs of the Series 2019 Bonds; and

(v) reimbursement to the Borrower for any costs described above paid by it, whether before or after the execution of the Indenture; provided, however, that reimbursement from the 2019A Account of the Construction Fund for any expenditures made prior to the execution of the Indenture will only be permitted for expenditures meeting the requirements of the Regulations, including but not limited to, §1.150-2 of the Regulations.

“CPI Adjustment” shall have the meaning ascribed thereto in the provisions of the Loan Agreement described in APPENDIX “D” hereto, “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS,” under the subheading “THE LOAN AGREEMENT – Destruction and Damage.”

“Debt Service Payment” means, with respect to the Bonds or any Series or Subseries of Bonds on any Bond Payment Date, (i) the premium, if any, and interest payable on the Bonds or such Series or Subseries of Bonds on such Bond Payment Date, (ii) the principal payable in respect of the Bonds or such Series or Subseries of Bonds on such Bond Payment Date, and (iii) the Mandatory Sinking Fund Redemption Requirement, if any, relating to the Bonds or such Series or Subseries of Bonds on such Bond Payment Date (collectively, the “Debt Service Payments”); provided, however, that with respect to a Bond Insurance Policy, Debt Service Payments shall not include the premium, if any, payable on the Bonds.

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“Debt Service Reserve Fund” means the Fund of that name created in the Indenture.

“Debt Service Reserve Requirement” with respect to the Bonds and any Issue of Additional Bonds, at the time of determination, means the least of (a) 10% of the stated principal amount thereof (less any original issue discount that exceeds a de minimis amount), (b) 125% of the average Annual Debt Service thereon from the date of calculation to the final maturity thereof, (c) the Maximum Annual Debt Service thereon, or (d) such lesser sum as required by the Code and the Regulations to ensure the exclusion of the interest on any Tax Exempt Bonds from the gross income of the Owners thereof for federal income tax purposes; provided, however, that the amount of principal due in any Bond Year will be determined, in the case of Bonds subject to mandatory sinking fund redemption pursuant to Section 303 and similar provisions in any supplemental indenture, by the principal amount of Bonds to be redeemed by mandatory sinking fund redemption in such Bond Year. Notwithstanding the foregoing, the Debt Service Reserve Requirement for the Series 2019B Bonds shall be $403,177.50, and the Debt Service Reserve Requirement for the Series 2019A Bonds initially shall be $3,223,278.76, such that the aggregate Debt Service Reserve Requirement for the Series 2019A Bonds and the Series 2019B Bonds shall not exceed the least of (a), (b), (c) and (d) described above.

“Default Condition” means the occurrence of an event or the existence of a condition that, with the lapse of time or with the giving of notice or both, would become an Event of Default.

“Default Rate” means the prime rate charged corporate borrowers by the commercial lending department of the Trustee, if any, or in the absence of such commercial lending department or rate, the rate designated the “Prime Rate” as published each Business Day in The Wall Street Journal, plus 2% per annum.

“Defaulted Interest” means any interest on any Bond that is due and payable, but that is not punctually paid or duly provided for on any Interest Payment Date.

“Defeasance Obligations” means (i) cash deposits (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in item (ii) below), (ii) to the extent the same are non-callable and non-prepayable, Government Obligations, (iii) evidences of ownership of a proportionate interest in specified Government Obligations, which Government Obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian, and (iv) subject to the prior written consent of each Bond Insurer, Defeased Municipal Obligations.

“Defeased Municipal Obligations” means obligations of state or local government municipal bond issuers that are rated in the highest rating category by S&P and Moody’s, respectively, provision for the payment of the principal of and interest on which will have been made by deposit with a trustee or escrow agent of (i) noncallable Government Obligations or (ii) evidences of ownership of a proportionate interest in specified noncallable Government Obligations, which Government Obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian, the maturing principal of and interest on such Government Obligations or evidences of ownership, when due and payable, will provide sufficient money to pay the principal of, redemption premium, if any, and interest on such obligations of state or local government municipal bond issuers.

“Developer” means RISE Boone, LLC, a limited liability company organized under the laws of the State of Georgia, and its successors and assigns.

“Developer Collateral Assignment” means the Developer Collateral Assignment Agreement dated February 1, 2019, by the Developer in favor of the Borrower, as the same may be amended and/or supplemented from time to time as permitted hereby (including to provide for the issuance of Additional Bonds).

“Developer Indemnity Letter,” with respect to the Series 2019 Bonds, means the indemnity letter dated February 7, 2019, from the Developer to the Authority, the Borrower, and the Underwriter, in the form attached as an exhibit to the Bond Purchase Agreement.

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“Development Agreement,” with respect to the Series 2019 Bonds, means the Student Housing Facilities Project Development Agreement dated as of February 1, 2019, between the Borrower and the Developer, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof and hereof.

“Discharged,” with respect to a Series or a Subseries of Bonds, means that all amounts due thereunder are actually and unconditionally due, if cash is available at the place of payment and no interest accrues thereafter with respect to such Series or Subseries of Bonds.

“Dissemination Agent” means Wilmington Trust, National Association, in its capacity as dissemination agent under the Continuing Disclosure Agreement and its successors and assigns, and the dissemination agent under any successor agreement.

“Document of Title” means all of the Borrower’s documents of title, as defined under the UCC and/or also including all of the Borrower’s existing, future-created, and future-acquired bills of lading, dock warrants, dock receipts, warehouse receipts, or orders for the delivery of goods, and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person or entity in possession of it is entitled to receive, hold, and dispose of the document and the goods it covers.

“DTC” means The Depository Trust Company, New York, New York, or any successor Securities Depository.

“DTC Participant” means brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among such brokers, dealers, banks, trust companies, clearing corporations, and other organizations.

“Equipment” means all of the Borrower’s Equipment, as defined under the UCC, including, without limitation, all of the Borrower’s the machinery, equipment, furnishings, or other property at any time installed or located on the Land, and substitutions or replacements therefor, all machinery, equipment, or other property that under the terms of any of the Loan Agreements is to become the property of the Borrower or is to be subjected to the lien of the Security Agreement, and, without limiting the foregoing, all of the property of the Borrower at any time installed or located on the Land together with all machinery, apparatus, equipment, fittings, fixtures, whether actually or constructively attached to said property and including all trade, domestic, and ornamental fixtures and articles of personal property of every kind and nature whatsoever now or hereafter located in, upon, or under said property or any part thereof all heating, air-conditioning, freezing, lighting, laundry, incinerating, and power equipment, gas and electric fixtures, engines, machinery, pipes, pumps, tanks, motors, conduits, switchboards, plumbing, lifting, cleaning, fire prevention, fire extinguishing, refrigerating, ventilating, and communications apparatus, safety equipment, boilers, ranges, furnaces, oil burners, or units thereof, appliances, air-cooling and air- conditioning apparatus, washers, dryers, water heaters, mirrors, mantels, vacuum cleaning systems, elevators, escalators, shades, awnings, screens, storm doors, and windows, stoves, wall beds, refrigerating plants, refrigerators, attached cabinets, partitions, ducts, and compressors, rugs and carpets and other floor covering, draperies, furniture and furnishings, together with all building materials and equipment now or hereafter delivered to the property and intended to be installed therein, including but not limited to, lumber, plaster, cement, shingles, roofing, plumbing, fixtures, pipe, lath, wallboard, cabinets, nails, sinks, toilets, furnaces, heaters, brick, tile, water heaters, screens, window frames, glass, doors, flooring, paint, lighting fixtures and unattached refrigerating, and cooking, heating, and ventilating appliances and equipment, together with all additions and accessions thereto and replacements thereof. Equipment shall not include any equipment, as defined in the UCC, located or related to the Series 2019 Related Improvements.

“Event of Default” means, with respect to the Indenture, the Loan Agreement, the Leasehold Deed of Trust, and the Security Agreement, each of the events so specified therein.

“Event of Taxability,” with respect to any Series or Subseries of Tax-Exempt Bonds, means the existence or absence of any circumstances that causes the interest thereon or on any portion thereof to become includable in the gross income of the Owner thereof for federal income tax purposes.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended,

“Expenses,” with respect to the Project, means, for any period, the aggregate of all expenses and expenditures relating thereto, including, without limitation, expenses or expenditures relating to the performance of any obligation of the Borrower under the Bond Documents or to the enforcement of the obligations of other parties to documents executed in connection with the Bond Documents; fees required to be paid to Beyond Owners Group under the Ground Lease; fees required to be paid to the Manager under the Operating Agreement; fees or remuneration to be paid or retained by the Borrower pursuant to the Asset Management Agreement; expenses incurred by the Borrower in connection with the inspection of the Project or the calculation, collection, and payment of the Rebate Amount relating to any Tax-Exempt Bonds as required by federal law; but excluding (i) any expense or expenditure paid with the proceeds of the Bonds or the Net Proceeds of insurance other than business or rental interruption insurance, (ii) interest on any Indebtedness to the extent that such interest is payable from the proceeds of such Indebtedness, (iii) any expenses resulting from forgiveness of or the establishment of reserves against Indebtedness of an Affiliate that do not constitute extraordinary expense, (iv) losses resulting from any reappraisal, revaluation, or write-down of assets, (v) any unrealized loss resulting from changes in the value of investment securities, (vi) payments made to the Ground Lessor under the Ground Lease, (vii) any expenses borne by the Ground Lessor or the University under the terms of the Ground Lease or the Operating Agreement, respectively, and (viii) Subordinated Expenses.

“Extraordinary Services of the Trustee” and “Extraordinary Expenses of the Trustee” mean all services rendered and all reasonable expenses incurred by the Trustee under the Indenture and under the other Bond Documents, including, without limitation, reasonable counsel fees and expenses, other than Ordinary Services of the Trustee and Ordinary Expenses of the Trustee.

“Favorable Opinion of Bond Counsel” means an opinion of Bond Counsel, addressed to the Authority, the Borrower, and the Trustee to the effect that the action proposed to be taken is authorized or permitted by the Act, the laws of the State of North Carolina, the Indenture, and the Loan Agreement and will not adversely affect any exclusion from gross income for federal income tax purposes of interest on any Tax-Exempt Bonds.

“Financial Consultant” means a firm of Accountants and/or professional management, marketing, or financial consultants having the skill and experience necessary to render the particular report required that is designated as such in writing by the Borrower and reasonably acceptable to each Bond Insurer. Such firm(s) will not be, and no member, stockholder, director, officer, or employee of which will be, an officer or employee of the Authority, the Borrower, the Developer or the University. The reports of the Financial Consultant showing projected financial performances may be in the form of a projection of the management of the Borrower that is accompanied by a statement of a Financial Consultant to the effect that such Financial Consultant has reviewed the underlying assumptions and procedures used by management and that such assumptions provide a reasonable basis for the projection of management.

“Fixed Charges” means, for any period, the sum of all cash outflows related to the Project that the Borrower cannot avoid without violating long-term contractual or legal obligations (those obligations that extend for a period greater than one year), including, but not limited to, (i) interest on Indebtedness other than Short-Term Indebtedness and (ii) scheduled payments of principal on Indebtedness other than Short-Term Indebtedness (each, a “Fixed Charge”). “Fixed Charges” do not include lease payments made to the Ground Lessor under the Ground Lease or any amounts payable in respect of any Indebtedness to the extent that such amounts are payable from the proceeds of such Indebtedness.

“Fixed Charges Coverage Ratio” means, for any period, the ratio of Revenue Available for Fixed Charges to Fixed Charges.

“Funds” means, collectively, all of the funds created pursuant to the Indenture (each, a “Fund”).

“GAAP” means those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board and its predecessors or pronouncements of the American Institute of Certified Public Accountants or those principles of accounting that have other substantial authoritative support and are applicable in the circumstances as of the date of application, as such principles are from time to time supplemented and amended.

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“General Contractor” means Choate Construction Company, a corporation organized under the laws of the State of Georgia and its successors and assigns.

“General Intangibles” means all of the Borrower’s intangibles, as defined under the UCC.

“Goods” means all of the Borrower’s goods, as defined under the UCC, whether currently existing and in possession and/or control of the Borrower or otherwise.

“Government Obligations” means direct obligations of, or obligations the payment of the principal of and interest on which when due are unconditionally guaranteed by the United States of America or any agency or instrumentality thereof and evidences of direct ownership interest in amounts payable on any of the foregoing.

“Ground Lease,” with respect to the Series 2019 Bonds, means the Ground Lease Agreement dated as of February 1, 2019, between the Ground Lessor and the Borrower, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof and of the Indenture.

“Ground Lessor” means the State of North Carolina by and through Appalachian State University, under authority delegated to the Board of Governors of the University of North Carolina.

“Indebtedness” means, but only to the extent incurred in connection with the Project or secured by a lien on the Project or the Pledged Revenues, (i) all indebtedness, whether or not represented by bonds, debentures, notes, or other securities, for the repayment of money borrowed, (ii) all deferred indebtedness for the payment of the purchase price of properties or assets purchased, (iii) all guaranties, endorsements (other than endorsements in the ordinary course of business), assumptions, and other contingent obligations in respect of, or to purchase or to otherwise acquire, indebtedness of others, (iv) all indebtedness secured by mortgage, pledge, security interest, or lien existing on property owned that is subject to such mortgage, pledge, security interest, or lien, whether or not the indebtedness secured thereby has been assumed, (v) swap or hedging obligations or other similar derivative or investment agreements that, under certain circumstances, require a payment on termination, and (vi) all capitalized lease obligations; provided, however, that for the purpose of computing Indebtedness, there will be excluded any particular Indebtedness if, on or prior to the maturity thereof, there is irrevocably deposited with the proper depository in trust the necessary funds (or direct, nonredeemable obligations of the United States of America) for the payment, redemption, or satisfaction of such Indebtedness, and thereafter such funds and such direct obligations of the United States of America so deposited will not be included in any computation of the assets of the Borrower and the income derived from such funds and such direct obligations of the United States of America so deposited will not be included in any computation of the income of the Borrower.

“Indemnity Letters,” with respect to the Series 2019 Bonds, means, collectively, the Borrower Indemnity Letter and the Developer Indemnity Letter.

“Indenture” means the Trust Indenture dated as of February 1, 2019, between the Authority and the Trustee, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof.

“Independent Counsel” means an attorney or firm of attorneys duly admitted to practice law before the highest court of any state of the United States or the District of Columbia and not in the full-time employment of the Authority or the Borrower.

“Independent Engineer” means any architect, engineer, or firm of architects or engineers that is independent of the Authority, the Borrower, the Developer and the University and that is selected by the Borrower and is reasonably acceptable to each Bond Insurer and the Ground Lessor, at the expense of the Borrower, to report and be accountable solely to the Trustee for the benefit of the Bondholders and that has all licenses and certifications necessary for the performance of such services, and that has a favorable reputation for skill and experience in performing similar services in respect of facilities of a comparable size and nature.

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“Indirect Participants” means those broker-dealers, banks, and other financial institutions from time to• time for which the Securities Depository holds Bonds as a securities depository through a Participant (each, an “Indirect Participant”).

“Instruments, Drafts, and Chattel Paper” means all of the Borrowers, instruments, notes, drafts, and chattel paper, as defined under the UCC.

“Insurance Consultant” means any Person that is not the Authority, the Borrower, or an Affiliate, appointed by the Borrower that is acceptable to the Trustee and each Bond Insurer and that is qualified to survey risks and to recommend insurance coverage for student housing facilities and organizations engaged in like operations as that of the Project, and that has a favorable reputation for skill and experience in such surveys and such recommendations and who may be a broker or agent with whom the Authority or the Borrower transacts business.

“Insurance Fund” means the Fund of that name created in the Indenture.

“Insured Series 2019 Bonds” means all of the Series 2019 Bonds.

“Interest Payment Dates” means January 1 and July 1 of each year, commencing July 1, 2019, in the case of Series 2019 Bonds, and the dates on which interest is scheduled to be paid, in the case of Additional Bonds (each, an “Interest Payment Date”).

“Inventory” means all of the Borrower’s inventory, as defined under the UCC, including, without limitation, all of the Borrower’s existing, future-created, and future-acquired goods, materials, supplies, stores of food, drugs, and linens now or hereafter held for sale and use or consumption at the Project, together with all documents, Documents of Title, dock warrants, dock receipts, warehouse receipts, bills of lading, or orders for the delivery of all or any portion of the foregoing, all goods in which the Borrower has an interest in mass or a joint or other interest or right of any kind, all goods that are returned to or repossessed by the Borrower, and all accessions thereto and products thereof.

“Investment Property” means all of the investment property of the Borrower, whether certificate or uncertificated, as defined under the UCC, including but not limited to, all securities, membership interests, partnership interests, or other equity interests currently owned or hereafter acquired by the Borrower.

“Irrevocable Deposit” means the irrevocable deposit with the Trustee in trust of Defeasance Obligations in accordance with the provisions of the Indenture. The Trustee will have possession of any such Defeasance Obligations (other than book-entry securities).

“IRS” means the United States Internal Revenue Service or any successor agency or department.

“Issuance Cost Fund” means the Fund of that name created in the Indenture.

“Issuance Costs,” with respect to the Series 2019 Bonds, means:

(i) the initial or acceptance fee of the Trustee (which includes the administration fee for the first year), the fees and taxes for recording and filing the Leasehold Deed of Trust, UCC-1 Financing Statements, and any curative documents that either the Trustee or Independent Counsel may reasonably deem desirable to file for record in order to perfect or protect the interest of the Borrower in Building 100 and the Parking Facility or the lien or security interest created or granted by the Leasehold Deed of Trust, the Security Agreement, the Assignment of Contracts or the Developer Collateral Assignment and the reasonable fees and expenses in connection with any actions or proceedings that either the Trustee or Independent Counsel may reasonably deem desirable to bring in order to perfect or protect the lien or security interest created or granted by the Leasehold Deed of Trust, the Security Agreement, the Assignment of Contracts, or the Developer Collateral Assignment in connection with the issuance thereof;

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(ii) legal fees and expenses, underwriter’s spread, underwriting fees, financing costs, Authority’s fees and expenses, financial advisor’s fees, accounting fees and expenses, consulting fees, Trustee’s fees, paying agent and certifying and authenticating agent fees, dissemination agent fees, publication costs, premiums paid in respect of a lender’s or mortgagee’s title insurance policy if an owner’s policy is issued contemporaneously therewith, and printing and engraving costs incurred in connection with the authorization, sale, issuance, and carrying of the Series 2019 Bonds and the preparation of the applicable Bond Documents and all other documents in connection therewith; and

(iii) other costs in connection with the issuance of the Series 2019 Bonds permitted by the Act to be paid or reimbursed from Series 2019 Bond proceeds.

“Issue” means obligations treated as part of the same issue pursuant to §1.150-1(c) of the Regulations.

“Joint Exercise Agreement” means the Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated September 28, 2010, by and among Adams County, Wisconsin, Bayfield County Wisconsin, Marathon County, Wisconsin, Waupaca County, Wisconsin and the City of Lancaster, Wisconsin, as such agreement may be amended from time to time.

“Land” means the land on which the Series 2019 Project is located, which is described in the Ground Lease and the Security Agreement.

“Latent Defect Report” with respect to each Student Housing Facility, means the written report of any latent and inherent defective items determined to be present in the design and construction of the Student Housing Facilities that may be attributable to any one or more of (i) defective design, (ii) defective workmanship or defective materials or components and (iii) defective installation of anything in such Student Housing Facility, which items are identified through a non-invasive inspection of such Student Housing Facility by the Independent Engineer in connection with the initial Periodic Project Assessment for such Student Housing Facility.

“Leasehold Deed of Trust,” with respect to the Series 2019 Bonds, means the Leasehold Deed of Trust, Fixture Filing, and Assignment of Rents and Subleases dated as of February 1, 2019, by the Borrower in favor of the deed of trust trustee named therein for the benefit of the Trustee, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof and of the Indenture.

“Letter of Representations” means the Blanket Issuer Letter of Representations dated October 21, 2010, executed by the Authority and delivered to DTC and any amendments thereto or any successor blanket agreement(s) between the Authority and any successor Securities Depository, relating to the Book-Entry System be maintained by the Securities Depository with respect to any Bonds issued by the Authority under the Indenture.

“Loan Agreement,” with respect to the Series 2019 Bonds, means the Loan Agreement dated as of December 1, 2019, between the Authority and the Borrower, as the same may be amended and/or supplemented from time to time in accordance with the provisions of the Indenture.

“Loan Payments” means the Basic Loan Payments, the Additional Loan Payments, and the Reserve Loan Payments.

“Majority of the Bondholders” means the Owners of more than 50% in aggregate principal amount of the Bonds then Outstanding.

“Manager” means, initially, the University, as the Manager of the Student Housing Facilities under the Operating Agreement, and thereafter, any other management company employed by the Borrower to manage the Student Housing Facilities with the prior written consent of the Ground Lessor and each Bond Insurer.

“Mandatory Sinking Fund Redemption Requirement,” with respect to the Series 2019 Bonds, and on the date of calculation, means the principal portion of any Series 2019 Bonds required by the provisions of the Indenture to be redeemed by the Authority on the immediately succeeding July 1.

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“Maximum Annual Debt Service,” with respect to a Series of Bonds, means the maximum Annual Debt Service thereon in the then current Bond Year or in any future Bond Year, whether at maturity or subject to mandatory sinking fund redemption.

“Maximum Interest Rate” means the “not to exceed” interest rate stated in the Bond Resolution in the amount of 15% per annum.

“Member” means each of the parties to the Joint Exercise Agreement and any political subdivision that has been designated in the past, or from time to time in the future is designated, as a member of the Authority pursuant to the Joint Exercise Agreement (collectively, the “Members”).

“Millennial Campus” means that portion of the campus of the University that has been designated as a “Millennial Campus” pursuant to Article 21B of Chapter 116 of the General Statutes of North Carolina, as amended, in the Project Jurisdiction.

“Moody’s” means Moody’s Investors Service, Inc., its successors and assigns, and if such corporation for any reason no longer performs the functions of a securities rating agency, “Moody’s” is deemed to refer to any other nationally recognized securities rating agency designated by the Borrower. Whenever rating categories of Moody’s are specified in the Indenture, such categories will be irrespective of gradations within a category.

“Net Proceeds,” when used with respect to any insurance or condemnation award, with respect to the sale or other disposition of a portion of the Project, or with respect to any other recovery on a contractual claim or claim for damage to or for taking of property, means the gross proceeds from the insurance or condemnation award, sale, or other disposition, or recovery remaining after payment of all reasonable expenses (including reasonable attorneys’ fees and any Extraordinary Expenses of the Trustee) incurred in the collection of such gross proceeds.

“Non-Construction Costs” means all Costs of the Project other than the costs and fees that are properly payable to the appropriate contractors pursuant to the Construction Contracts.

“Notes” means the Series 2019 Note and any Additional Notes.

”Office of the Trustee” means the designated trust office of the Trustee in Birmingham, Alabama, currently located at 505 20th Street North, Suite 1750, or such other location as may be designated by it to the Authority and the Borrower in writing, or the corporate trust office of, or such other location as may be designated to the Authority and the Borrower in writing by, any successor or temporary Trustee under the Indenture.

“Offsite Improvements” means site development and off-site infrastructure improvements relating to Building 100 and the Parking Facility, including, but not limited to, grading, street and sidewalk improvements, and utility infrastructure financed with proceeds of the Series 2019 Bonds and constructed and equipped in accordance with the Development Agreement, but which are not located within the boundaries of the Property and are not part of Building 100 or the Parking Facility.

“Operating Account” means the account established by the Manager which the Borrower will cause the Manager to pay Expenses provided, however, that during such time as the University serves as the Manager of the Project, the account will be established by the University, as Manager, with the North Carolina Department of State Treasurer in a restricted accounting fund.

“Operating Account Surplus” means the amount, if any, by which the amounts paid to the Borrower or the Manager by the Trustee for deposit into the Operating Account in an Annual Period pursuant to the Indenture exceed the amounts paid, incurred, or accrued in respect of operating expenses of the Project during such Annual Period, such amount to be determined with reference to, and simultaneously with the delivery of, the audited financial statements delivered to the Trustee in accordance with the provisions of the Loan Agreement, as such amount may be adjusted in accordance with the provisions of the Indenture. For purposes of calculating the Operating Account Surplus for any Annual Period, amounts remaining in the Operating Account at the end of such

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Annual Period representing reserves for Shortfall Periods are considered to be accrued in respect of operating expenses of the Project during such Annual Period.

“Operating Agreement,” with respect to the Series 2019 Bonds, means (i) the Operating Agreement dated as of February 14, 2019, between the Borrower and the Manager, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof and (ii) any operations or similar agreement between the Borrower and any successor Manager relating to the operation and management of the Student Housing Facilities and any additional project acquired, constructed, furnished, and equipped with the proceeds of Additional Bonds, in form and substance acceptable to each Bond Insurer, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof.

“Operations Contingency Fund” means the Fund of that name created in the Indenture.

“Opinion of Counsel” means an opinion in writing of Independent Counsel who or that is reasonably acceptable to all recipients thereof and who or that may be counsel to the Authority, the Trustee, or the Borrower.

“Ordinary Services of the Trustee” and “Ordinary Expenses of the Trustee” mean those reasonable services rendered and those reasonable expenses incurred by the Trustee in the performance of its duties under the Indenture and under the other Bond Documents of the type ordinarily performed by corporate trustees under like indentures, including, without limitation, reasonable counsel fees and expenses, other than Extraordinary Services of the Trustee and Extraordinary Expenses of the Trustee.

“Outstanding Bonds” or “Bonds Outstanding” or “Outstanding” in reference to any Bonds means all Bonds that have been duly authenticated and delivered by the Trustee under the Indenture, except:

(i) Bonds theretofore canceled or required to be canceled by the Trustee;

(ii) Bonds that are deemed to have been paid in accordance with the Indenture; and

(iii) Bonds in substitution for which other Bonds have been authenticated and delivered under the Indenture.

If the Indenture is discharged pursuant to the provisions of the Indenture, no Bonds will be deemed to be Outstanding within the meaning of this definition.

“Parking Facility” a structured parking garage with approximately 475 spaces serving the students, faculty and staff of the University, with associated site development and various related amenities and improvements, to be located on the Millennial Campus of the University in the Project Jurisdiction.

“Parking Facility Account” means that certain account within the Repair and Replacement Fund created under the Indenture.

“Parking Facility Lease” means that certain Facility Lease dated as of February 1, 2019, between the Borrower and the University, pursuant to which the Borrower shall lease the Parking Facility to the University.

“Participants” means those broker-dealers, banks, and other financial institutions from time to time for which the Securities Depository holds Bonds as a securities depository (each, a “Participant”).

“Periodic Project Assessment” means, with respect to any Student Housing Facility (and, for the Series 2019 Project, the Parking Facility), the periodic review of the adequacy of the amounts for the Repair and Replacement Fund Requirement (not less than every five (5) years following the Completion Date for each Student Housing Facility) by an Independent Engineer retained by or on behalf of the Borrower based on a physical needs reserve analysis with respect to the then-current condition of the Student Housing Facilities and, for the Series 2019 Project, the Parking Facility, the then-current balance in the Repair and Replacement Fund and all amounts expected to be expended over the next succeeding five Annual Periods for major maintenance, repair and replacement

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(“MRR”) at the Student Housing Facilities and, if necessary, the Parking Facility, and to be reserved for longer dated MRR at the Student Housing Facilities and, if necessary, the Parking Facility, up to and including the stated final maturity of the Bonds; provided, however, that the initial Periodic Project Assessment for each Student Housing Facility and the Parking Facility will also include a Latent Defect Report.

“Permitted Encumbrances” means, as of any particular time:

(i) liens for ad valorem taxes, special assessments, and other charges not then delinquent or for taxes, assessments, and other charges being contested in accordance with the Loan Agreement;

(ii) the Bond Documents;

(iii) currently existing utility, access, and other easements and rights of way, restrictions, and exceptions described in the title policy required by the Loan Agreement;

(iv) utility, access, and other easements and rights of way, restrictions, and exceptions that have been determined by the Trustee and each Bond Insurer not to materially impair the use of the Project for its intended purpose or materially and adversely affect the value thereof;

(v) rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, or permit, or provision of law, affecting the Project, to (a) terminate such right, power, franchise, grant, license or permit, provided that the exercise of such right been has been determined by the Trustee and each Bond Insurer not to materially. .impair the use of the Project for its intended purpose or materially and adversely affect the value thereof; or (b) purchase, condemn, appropriate, or recapture, or designate a purchaser of, the Project;

(vi) rights reserved to or vested in any municipality or public authority to control or regulate the Project or to use the Project in any manner that have been determined by the Trustee and each Bond Insurer not to materially impair the use of the Project for its intended purpose or materially and adversely affect the value thereof;

(vii) inchoate mechanics’ and materialmen’s liens that arise by operation of law, but that have not been perfected by the required filing of record, for work done or materials delivered after the date of recording the Leasehold Deed of Trust in connection with Additions or Alterations;

(viii) the mechanics’ and materialmen’s liens permitted by the Loan Agreement;

(ix) liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance, or other forms of governmental insurance or benefits;

(x) liens to secure the performance of letters of credit, bids, tenders, statutory obligations, leases, and contracts (other than for borrowed funds) entered into in the ordinary course of business to secure obligations on appeal bonds;

(xi) statutory restrictions imposed on the use of real property owned by or for the benefit of the University;

(xii) judgment liens against the Borrower so long as such judgment is being contested in good faith and execution thereon is stayed or while the period for responsive pleading has not lapsed;

(xiii) liens arising by reason of an Irrevocable Deposit; and

(xiv) any interest of the Ground Lessor in the Projects under the Ground Lease.

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“Permitted Investments” means any one or more of the following investments, if and to the extent the same are then legal investments under applicable law (such legality to be determined by an Authorized Borrower Representative and not the Trustee):

(a) Government Obligations;

(b) debt obligations, participations or other instruments issued or fully guaranteed by any U.S. Federal agency, instrumentality, corporation, or government-sponsored enterprise (GSE), including but not limited to: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, the Federal Farm Credit System, Tennessee Valley Authority, and REFCORP principal strips;

(c) direct and general obligations of any state of the United States of America or any municipality or political subdivision of such state, or obligations of any corporations, if such obligations are rated in one of the two highest rating categories by S&P or Moody’s, or on the discontinuance of either or both of such rating services, any other nationally recognized rating service;

(d) negotiable or nonnegotiable certificates of deposit, time deposits, or other similar banking arrangements, issued by any nationally or state-chartered bank or trust company (including the Trustee) or any savings and loan association, domiciled in the State of North Carolina, if either (i) the long-term obligations of such bank or trust company are rated in one of the two highest rating categories by S&P or Moody’s, or, on the discontinuance of either or both of such rating services, any other nationally recognized rating service or (ii) the deposits are continuously secured as to principal, but only to the extent not insured by the Federal Deposit Insurance Corporation, or similar corporation chartered by the United States of America, (1) by lodging with a bank or trust company, as collateral security, obligations described in paragraph (a), (b) or (c) above or, with the approval of the Trustee, other marketable securities eligible as security for the deposit of trust funds under applicable regulations of the Comptroller of the Currency of the United States of America or applicable state law or regulations, having a market value (exclusive of accrued interest) not less than the amount of such deposit, or (2) if the furnishing of security as provided in clause (1) of this paragraph is not permitted by applicable law, in such manner as may then be required or permitted by applicable state or federal laws and regulations regarding the security for the deposit of trust funds;

(e) repurchase agreements with respect to obligations listed in paragraph (a), (b) or (c) above if entered into with a nationally or state-chartered bank, trust company or a “broker” or “dealer” (as defined by the Securities Exchange Act of 1934 as amended) which is a member of the Securities Investors Protection Corporation if (i) such obligations that are the subject of such repurchase agreement are delivered to the Trustee or are supported by a safekeeping receipt issued by depository that is a regular market participant in such transactions, provided that such repurchase agreement must provide that the value of the underlying obligations will be maintained at current market value, calculated no less frequently than monthly, of not less than the repurchase price, (ii) a prior perfected security interest in the obligations which are the subject of such repurchase agreement has been granted to the Trustee, and (iii) such obligations are free and clear of any adverse third-party claims;

(f) commercial paper maturing in 270 days or less and rated in the highest rating category by two nationally recognized rating services;

(g) money market mutual funds invested solely in obligations listed in paragraphs (a) through (d) above;

(h) investment agreements in form and substance acceptable to each Bond Insurer with any nationally or state-chartered bank, financial institution, insurance company or trust company which has long-term debt obligations rated in one of the three highest categories by a nationally recognized rating agency and which entities are otherwise acceptable to each Bond Insurer. Should the Issuer’s or guarantor’s credit quality be downgraded below “A,” the Trustee must have withdrawal rights;

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(i) certificates or receipts issued by any nationally or state-chartered bank, trust company or “broker” or “dealer” (as defined by the Securities Exchange Act of 1934, as amended) which is a member of the Securities Investors Protection Corporation, organized and existing under the laws of the United States of America or any state thereof; the outstanding unsecured long-term debt of which is rated in either of the two highest rating categories by S&P or Moody’s, or, on the discontinuance of either rating service, any other nationally recognized ratings service, in the capacity of custodian, which certificates or receipts evidence ownership or a portion of the principal of or interest on Government Obligations held (which may be in book entry form) by such bank, trust company or broker or dealer (as defined by the Securities Exchange Act of 1934, as amended) as custodian; and

(j) tax-exempt obligations (as defined in Section 150(a)(6) of the Code and which are not “investment property” as defined in Section 148(b)(2) of the Code) rated in one of the two highest rating categories by S&P or Moody’s, or on the discontinuance of such ratings service, any other nationally recognized ratings service; but “Permitted Investments” does not include a financial instrument, commonly known as a “derivative,” whose performance is derived, at least in part, from the performance of any underlying asset, including, without limitations, futures, options on securities, options on futures, forward contracts, swap agreements, structured notes and participations in pools of mortgages or other assets. All ratings will be determined at the time of initial investment. The Trustee has no obligation to monitor any changes in such ratings.

“Person” means natural persons, firms, joint ventures, associations, trusts, partnerships, corporations, limited liability companies, public bodies, and similar entities.

“Plans and Specifications,” with respect to the Series 2019 Project, means the detailed plans and specifications for the construction thereof prepared by the Architect or by architects and engineers acceptable to the University, Developer and the Borrower, as amended from time to time by the Borrower with the consent of the Ground Lessor, a copy of which will be on file with the Trustee.

“Pledged Revenues,” for any period, means (i) the sum of (a) the gross receipts and operating and non- operating revenues derived by the Borrower from the ownership or operation of the Project (other than contributions), and (b) Net Proceeds of insurance, and (c) Unrestricted Contributions, but excluding in any event, (ii) the sum of (a) earnings on amounts that are irrevocably deposited in escrow to pay the principal of or interest on Indebtedness, and (b) any security deposits received from occupants of the Project, if any, and held by the Borrower until such time as the Borrower is permitted to apply such deposits to the payment of rent or to the repair and maintenance of the Project in accordance with the terms of a lease or residency agreement, and (c) earnings or gains resulting from any reappraisal, revaluation, or write-up of assets, and (d) any unrealized gain resulting from changes in the value of investment securities, and (e) housing application fees, if any, collected by the Ground Lessor by or on behalf of the Borrower, and (f) earnings on any Pledged Revenues while held by the State of North Carolina.

“Premises” means, collectively, the Property, Building 100 and the Parking Facility.

“Project” means Building 100, the Parking Facility, and the Offsite Improvements, and any additional project acquired, constructed, furnished, and equipped with the proceeds of Additional Bonds.

“Project Jurisdiction” means the Town of Boone, North Carolina.

“Property” means the land described in the Indenture. Such land shall not encompass any of the Offsite Improvements.

“Qualified Exchange Agreement” means any agreement entered into between the Borrower and any Qualified Exchange Agreement Counterparty, which agreement is in form and substance acceptable to each Bond Insurer, provides that during the term thereof, the Borrower will pay to the Qualified Exchange Agreement Counterparty an amount based on the interest accruing at a fixed rate per annum on an amount equal to the principal amount of such Bonds or portions thereof and that the Qualified Exchange Agreement Counterparty will pay to the

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Borrower an amount based on the interest accruing on a principal amount equal to the same principal amount of such Bonds or portions thereof at a variable rate per annum, in each case computed according to a formula set forth in such agreement, or that one will pay to the other any net amount or other upfront payment due under such agreement, or any of the following: a cap, floor, or collar agreement; forward rate agreement; future rate agreement; swap agreement described above; asset, index, price or market-linked transaction or agreement; other exchange or rate protection transaction or agreement; or other similar transaction (however designated), relating to an exchange of interest rates, cash flows or payments.

“Qualified Exchange Agreement Counterparty” means any financial institution entering into a Qualified Exchange Agreement with the Borrower that, at the time of the execution of such Qualified Exchange Agreement, (i) satisfies any applicable requirements of law, (ii) is rated, or whose debt is guaranteed, insured, or collateralized, or otherwise supported, by an entity whose financial strength or claims-paying ability is rated, “AA-” or better by S&P and “Aa3” or better by Moody’s, and (iii) is acceptable to each Bond Insurer.

“Rating Agency,” at any point in time, means any nationally recognized securities rating agency or service then rating a Series or a Subseries of Bonds (collectively, the “Rating Agencies”). When used in the definition of “Permitted Investments,” the term Rating Agencies includes either of Moody’s or S&P, whether or not either of them then rates a Series or Subseries of Bonds, or such other nationally recognized securities rating agency or service designated by the Borrower.

“Rebate Amount,” means, as of any Calculation Date, the amount that would have been required to be paid to the United States of America under §148(f) of the Code with respect to all Outstanding Tax-Exempt Bonds had all of such Tax-Exempt Bonds been Discharged on and as of such Calculation Date.

“Rebate Analyst” means any independent certified public accountant, financial analyst, or Bond Counsel, or any firm of the foregoing, or financial institution, experienced in making the arbitrage and rebate calculations required pursuant to §148(f) of the Code, selected and retained and compensated by the Borrower pursuant to the provisions of the Loan Agreement described in APPENDIX “D” hereto, “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS,” under the subheading “THE LOAN AGREEMENT – Covenants With Respect to Arbitrage Rebate” to make the computations and give the directions required under the Indenture.

“Rebate Fund” means the Fund of that name created in the Indenture.

“Rebate Year” means, as to a Series of Tax-Exempt Bonds, the period beginning on the Closing Date for such Series of Tax-Exempt Bonds and ending on the day immediately preceding the immediately succeeding anniversary of such Closing Date, and each one year period thereafter beginning on the day immediately succeeding the last day of the immediately preceding Rebate Year and ending on the day immediately preceding the immediately succeeding anniversary of the Closing Date for such Series of Bonds, unless the Borrower, the Authority, and the Trustee are advised by the Rebate Analyst that another period is required by law; provided, however, that the last Rebate Year for a Series of Tax-Exempt Bonds will end on the date on which such Series of Tax-Exempt Bonds will be paid or deemed paid in full.

“Redemption Fund” means the Fund of that name created in the Indenture.

“Redemption Price” means, with respect to Bonds or a portion thereof, the principal amount of such Bonds or portion thereof plus accrued interest, if any, plus the applicable premium, if any, payable on redemption thereof in the manner contemplated in accordance with its terms and the Indenture.

“Regular Record Date” means the 15th day of the month (whether or not such day is a Business Day) immediately preceding each Interest Payment Date.

“Regulations” means the applicable treasury regulations promulgated under the Code or under §103 of the Internal Revenue Code of 1954, as amended, whether at the time proposed, temporary, final, or otherwise. Reference herein to any specific provision of the Regulations shall be deemed to include a reference to any successor provision or provisions to such provision.

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“Related Improvements” means the Offsite Improvements and any additional project or improvements acquired, constructed, furnished and equipped with the proceeds of Additional Bonds that are not located within the boundaries of the Property.

“Repair and Replacement Fund” means the Fund of that name created in the Indenture.

“Repair and Replacement Fund Requirement” with respect to the Student Housing Facilities, and, for the Series 2019 Project, the Parking Facility, means the amount of money specified in the Indenture, to be deposited in each Annual Period to the Repair and Replacement Fund (and in the Parking Facility Account within such fund) in accordance with the Indenture; provided, however, that the Repair and Replacement Fund Requirement shall be adjusted upwards or downwards by the amounts recommended in the latest Periodic Project Assessment for each Student Housing Facility and, for the Series 2019 Project, the Parking Facility and upwards by amounts otherwise approved by the Borrower and University. In the event a Periodic Project Assessment for the Parking Facility indicates the need to make deposits to the Parking Facility Account of the Repair and Replacement Fund, the Repair and Replacement Fund shall include such amount.

“Repair and Replacement Loan Payments” with respect to the Student Housing Facilities, means the Loan Payments to be made in accordance with the Loan Agreement and as provided in the Indenture.

“Requisite Number of Bondholders” means the Owners of not less than 25% in aggregate principal amount of the Bonds then Outstanding.

“Reserve Loan Payments” means the Loan Payments payable by the Borrower to the Authority pursuant to the Loan Agreement that are described in APPENDIX “D” hereto, “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS,” under the subheading “THE LOAN AGREEMENT - Loan Payments and Other Amounts Payable – Reserve Loan Payments.”

“Responsible Officer” means, when used with respect to the Trustee, any officer within the Corporate Trust Department (or any successor group of the Trustee) including, without limitation, any vice president, assistant vice president, assistant secretary, or any other officer or assistant officer of the Trustee designated by the Trustee (collectively, the “Responsible Officers”).

“Restricted Account of the Surplus Fund” means the Account of the Surplus Fund of that name created in the Indenture.

“Revenue Available for Fixed Charges” means, for any period, the excess of Revenues over Expenses, plus, to the extent that the same is included as an Expense, (i) expenses or expenditures made in respect of the Project that are capitalized, (ii) any extraordinary expenses (including without limitation losses on the sale of assets other than in the ordinary course of business and losses on the extinguishment of debt or termination of pension plans), (iii) the repayment of the principal amount of any Indebtedness, (iv) lease payments made to the Ground Lessor under the Ground Lease, (v) interest on Indebtedness other than Short-Term Indebtedness, (vi) depreciation, and (vii) amortization.

“Revenue Fund” means the Fund of that name created in the Indenture.

“Revenues,” for any period, means Pledged Revenues minus (i) any gains on the sale or other disposition of investments or fixed or capital assets not in the ordinary course of business, (ii) any contributions from any Affiliate, (iii) any Net Proceeds of insurance other than business or rental interruption insurance.

“Sales Tax Refunds” means all sales taxes paid by the Borrower to the State of North Carolina with respect to construction materials purchased by the Borrower for the acquisition, construction, furnishing and equipping of the Project and thereafter refunded by the State of North Carolina to the Borrower.

“S&P” means S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, its successors and assigns, and if such corporation for any reason no longer performs the functions of a securities rating

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agency, “S&P” will be deemed to refer to any other nationally recognized securities rating agency designated by the Borrower. Whenever rating categories of S&P are specified in the Indenture, such categories will be irrespective of gradations within a category.

“Secondary Reserve Fund” means the fund by that name established with the Trustee under the Indenture, but not pledged as part of the Trust Estate.

“Security” means any of the property subject to the operation of the granting clauses contained in the Security Documents (including, without limitation, the Trust Estate).

“Security Agreement,” with respect to the Series 2019 Bonds, means the Pledge and Security Agreement dated as of February 1, 2019, by and between the Borrower and the Trustee, as the same may be amended and/or supplemented from time to time in accordance with the provisions thereof and hereof.

“Security Documents” means, collectively, the Indenture, the Leasehold Deed of Trust, the Security Agreement, the Assignment of Contracts, the Developer Collateral Assignment and the Loan Agreement (each, a “Security Document”).

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Depository,” with respect to the Series 2019 Bonds, means DTC or other recognized securities depository selected by the Authority at the request of the Borrower that maintains the Book-Entry System in respect of such Bonds and agrees to follow the procedures required to be followed under the Indenture by a securities depository and includes any substitute for or successor to the securities depository initially acting as securities depository.

“Securities Depository Nominee” means, as to any Securities Depository, such Securities Depository or the nominee of such Securities Depository in whose name there is registered on the Bond Register the Bond certificates to be delivered to and immobilized at such Securities Depository during the continuation with such Securities Depository of participation in the Book-Entry System.

“Series,” with respect to the Bonds, means all Bonds issued pursuant to the same Bond Resolution. Two or more Subseries of Bonds may be part of the same Series of Bonds even though they may not be issued and delivered on the same day.

“Series 2019 Bond Insurance Policy” means the insurance policy issued by the Series 2019 Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Insured Series 2019 Bonds when due.

“Series 2019 Bond Insurer” means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof.

“Series 2019 Bond Insurer Default” means the occurrence and continuance of one or more of the following events: (a) the Series 2019 Bond Insurer is in default in its obligation to make payments under (i) the Series 2019 Bond Insurance Policy when due or (ii) the Series 2019 Reserve Policy when due; (b) the Series 2019 Bond Insurance Policy or the Series 2019 Reserve Policy ceases at any time and for any reason to be valid and binding on the Series 2019 Bond Insurer, or is declared to be null and void, in each case by a final, non-appealable order of a court of competent jurisdiction, or the validity or enforceability of any provision thereof is being contested by the Series 20.19 Bond Insurer or any governmental agency or authority acting as a receiver or similar capacity for the Series 2019 Bond Insurer, or if the Series 2019 Bond Insurer is denying further liability or obligation under the Series 2019 Bond Insurance Policy or the Series 2019A Reserve Policy; (c) a proceeding is instituted in a court having jurisdiction in the premises seeking an order for relief, rehabilitation, reorganization, conservation, liquidation or dissolution in respect of the Series 2019 Bond Insurer under Article 16 of the Insurance Law of the State of New York or any successor provision thereto or similar provision of law and such proceeding is not terminated for a period of 90 consecutive days or such court enters an order granting the relief sought in such

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proceeding; or (d) the Insured Series 2019 Bonds are no longer Outstanding and any amounts due or to become due to the Series 2019 Bond Insurer have been paid in full.

“Series 2019 Bond Insurer Reimbursement Amounts” has the meaning specified in the Indenture.

“Series 2019 Bonds” means, collectively, the Series 2019A Bonds and the Series 2019B Bonds.

“Series 2019 Completion Date” means the date of substantial completion of the Series 2019 Project, as certified by the Borrower as provided in the Loan Agreement.

”Series 2019 Construction Period” with respect to the Series 2019 Project, means the period between the beginning of construction thereof or the date on which a Series of Bonds, the proceeds of which are used to finance the Series 2019 Project, are first issued hereunder (whichever is earlier) and the Series 2019 Completion Date.

“Series 2019 Loan” means the loan by the Authority to the Borrower of the proceeds of the Series 2019 Bonds pursuant to the Loan Agreement and that is evidenced by the Series 2019 Notes.

“Series 2019 Notes” means, collectively, the Series 2019A Bonds and the Series 2019B Bonds.

“Series 2019 Project” means the acquisition, construction, furnishing of Building 100, the Parking Facility and the Offsite Improvements.

“Series 2019A Bonds” means the revenue bonds designated “Public Finance Authority Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Series 2019A” in the aggregate principal amount of $60,760,000 to be issued pursuant to the Indenture.

“Series 2019A Note” the Series 2019A Promissory Note of the Borrower dated February 14, 2019, in the original principal amount of $925,000, payable to the Authority, given to evidence the obligation of the Borrower to repay the portion of the Series 2019 Loan relating to the Series 2019A Bonds.

“Series 2019A Reserve Policy” means the Municipal Bond Debt Service Reserve Insurance Policy issued by the Series 2019 Bond Insurer providing for the funding of 50% of the initial Debt Service Reserve Requirement for the Series 2019A Bonds as provided therein.

“Series 2019B Bonds” means the revenue bonds designated “Public Finance Authority Taxable Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Series 2019B’ in the aggregate principal amount of $925,000 to be issued pursuant to the Indenture.

“Series 2019B Note” the Series 2019B Promissory Note of the Borrower dated February 14, 2019, in the original principal amount of $925,000, payable to the Authority, given to evidence the obligation of the Borrower to repay the portion of the Series 2019 Loan relating to the Series 2019B Bonds.

“Shortfall Periods” means certain periods of time (e.g., summer months) when the Revenues may be inadequate to pay all of the Expenses.

“Short-Term Indebtedness” means any Indebtedness maturing not more than 365 days after it is incurred or that is payable on demand, except for any such Indebtedness that is renewable or extendable at the sole option of the debtor to a date more than 365 days after it is incurred, or any such Indebtedness that, although payable within 365 days, constitutes payments required to be made on account of Indebtedness expressed to mature more than 365 days after it was incurred.

“Sinking Fund Requirement,” with respect to the Series 2019 Bonds, means the principal amount established under the Indenture for the retirement thereof by purchase or redemption on July 1 of such Bond Year.

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“Special Record Date,” for the payment of any Defaulted Interest, means the date fixed by the Trustee pursuant to the Indenture.

“Sponsor” means each of the National League of Cities, the National Association of Counties, the Wisconsin Counties Association, the League of Wisconsin Municipalities, and any other Person that holds itself out, or is identified by the Authority, as an organization sponsoring the Authority (collectively, the “Sponsors”).

“Student Housing Facilities” means initially Building 100, and upon the issuance of Additional Bonds, any portion of any Project financed with such Additional Bonds that constitutes a student housing facility.

“Subordinated Expenses” means any expenses of the Project which the University agrees in writing to pay and to be reimbursed on a subordinated basis in each Annual Period and which are acceptable to the Borrower and each Bond Insurer, payable from time to time out of the Secondary Reserve Fund as provided in the Indenture; provided that, with respect to the Series 2019 Project, Subordinated Expenses shall include all costs and expenses of the University for performing the Administrative Services and the Maintenance Services described in the Operating Agreement as of the Closing Date of the Series 2019 Bonds, and related personnel costs.

“Subseries,” with respect to the Bonds, means all Bonds of a Series that have the same designation and date of issuance and delivery (but do not necessarily have the same maturity date or bear interest at the same rate). If a Series of Bonds has only one Subseries, such Subseries will also constitute a Series.

“Super-Majority of the Bondholders” means the Owners of not less than 2/3rds in aggregate principal amount of the Bonds then Outstanding.

“Surplus Fund” means the Fund of that name created in the Indenture.

“Tax Agreement,” with respect to the Series 2019 Bonds, means the Tax Certificate dated as of February 14, 2019, by and between the Authority and the Borrower and the Owner.

“Tax-Exempt Bonds” means any Bonds the interest on which is intended to be excluded from the gross income of the Owners thereof for federal income tax purposes.

“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof (i) that is an organization described in §501(c)(3) of the Code, (ii) that is exempt from federal income taxes under §501(a) of the Code, and (iii) unless a Favorable Opinion of Bond Counsel shall be delivered to the Authority and the Trustee, that is not a “private foundation,” within the meaning of §509(a) of the Code.

“Taxable Bonds” means any Bonds that are not Tax Exempt Bonds.

“Trustee” means the trustee and any co-trustee at the time serving as such under the Indenture. Wilmington Trust, National Association, Birmingham, Alabama, is the initial Trustee.

“Trust Estate” means any and all property subject to the operation of the granting clauses of the Indenture including:

(i) all the right, title, and interest of the Authority in and to (a) the Loan Agreement (except for Unassigned Rights) and any loan, financing, or similar agreement between the Authority and the Borrower relating to Additional Bonds and (b) the Series 2019 Notes and any other Notes, and all extensions and renewals of the terms thereof, if any, and all amounts encumbered thereby, including, but without limiting the generality of the foregoing, the present and continuing right to make claim for, collect, receive, and make receipt for payments and other sums of money payable, receivable, or to be held thereunder, to bring any actions and proceedings thereunder or for the enforcement thereof, and to do any and all other things that the Authority is or may become entitled to do under the foregoing;

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(ii) all the right, title, and interest of the Authority in and to all cash proceeds and receipts arising out of or in connection with the sale of the Bonds and all moneys held by the Trustee in the funds created under the Indenture (excluding the Rebate Fund and the Secondary Reserve Fund), including the Revenue Fund, the Bond Fund, the Redemption Fund, the Issuance Cost Fund, the Construction Fund, the Debt Service Reserve Fund, the Repair and Replacement Fund, the Insurance Fund, the Condemnation Fund, the Operations Contingency Fund, and the Surplus Fund created under the Indenture, or held by the Trustee as special trust funds derived from insurance proceeds, condemnation awards, payments on contractors’ performance or payment bonds or other surety bonds, or any other source;

(iii) all the right, title, and interest of the Authority in and to all moneys and securities and interest earnings thereon from time to time delivered to and held by the Trustee under the terms of the Indenture and all other rights of every name and nature and any and all other property from time to time after the Closing Date by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned, or transferred as and for additional security under the Indenture by the Authority or by anyone on its behalf or with its written consent to the Trustee; and

(iv) all other property of every name and nature from time to time after the Closing Date by delivery or by writing mortgaged, pledged, delivered, or hypothecated as and for additional security under the Indenture by the Authority or by anyone on its behalf or with its written consent in favor of the Trustee.

“2019A Account of the Construction Fund” means the Account of the Construction Fund of that name created in the Indenture.

“2019A Account of the Issuance Cost Fund” means the Account of the Issuance Cost Fund of that name created in the Indenture.

“2019A Subaccount of the Capitalized Interest Account” means the subaccount of the Capitalized Interest Account of that name created in the Indenture.

“2019B Account of the Issuance Cost Fund” means the Account of the Issuance Cost Fund of that name created in the Indenture.

“2019B Subaccount of the Capitalized Interest Account” means the subaccount of the Capitalized Interest Account of that name created in the Indenture.

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of North Carolina; provided, that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non- perfection of any lien on any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of North Carolina, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for the purposes of the provisions hereof relating to such perfection or the effect of perfection or non- perfection. References to sections of the UCC will be construed as necessary to refer to any successor sections of the UCC.

“UCC Accounts” means all of the Borrower’s accounts, as defined under the UCC and, without limitation, includes all of the Borrower’s existing and future created or future-acquired accounts, receivables, or rights of any kind to receive payment for goods sold or leased or for services rendered, contract rights, documents, bills, leases, rents, chattel paper, licenses, rights to refunds or indemnification, acceptances and other forms of obligations, tax refunds, insurance proceeds and all proceeds of the above including the right of stoppage in transit and all books, records, computer programs, tapes, discs, software, and guaranties with respect to any of the above.

“Unassigned Rights” means, inter alia, all of the rights of the Authority to (i) inspect books and records; (ii) give or receive notices, approvals, consents, requests, and other communications; (iii) receive payment or reimbursement for expenses, including without limitation, Authority Additional Payments; (iv) immunity from and limitation of liability; (v) indemnification by the Borrower; and (vi) to enforce, it is own name and on its own behalf, those provisions of the Indenture, and of any other document, instrument, or agreement entered into with

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respect to the Bonds that provides generally for the foregoing enumerated rights or any similar rights of the Authority or any of the Authority Indemnified Persons. For avoidance of doubt, the “Unassigned Rights” referenced in items (iv), (v) and (vi), above, shall be interpreted broadly to encompass (but not be limited to) the rights of the Authority Indemnified Persons to immunity from and limitation of liability and indemnification by the Borrower as provided in the Loan Agreement and the right of any such Authority Indemnified Person to enforce such rights in his, her or its own name.

“Underwriter” means RBC Capital Markets, LLC, and its successors and assigns.

“University” means Appalachian State University.

“Unrestricted Contributions” means contributions to the Borrower that are not restricted in any way that would prevent their application to the payment of debt service on Indebtedness of the Borrower.

“Valuation Dates” means, collectively, the dates on which the Trustee is required to determine the Value of the cash and investments in the Debt Service Reserve Fund, which dates will be (i) the date on which any portion of a Series or Subseries of Bonds will be defeased in accordance with the provisions of the Indenture described in APPENDIX “D” hereto, “SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS,” under the subheading “THE INDENTURE – Discharge of Lien” and (ii) prior to a determination that such Value is less than the Debt Service Reserve Requirement (a “Deficiency Determination”), June 30 and December 31 of each year and, after a Deficiency Determination, the last day of each month until the Value of the cash and investments in the Debt Service Reserve Fund again equals or exceeds the Debt Service Reserve Requirement; provided, however, if any such day is not a Business Day the Trustee will make such determination as of the immediately succeeding Business Day (each, a “Valuation Date”).

“Value,” with respect to Permitted Investments, means (i) as to investments the value of which is established by the pricing service utilized by the Trustee in its ordinary course of business, the value most recently listed for such investments by such pricing service; (ii) as to investments the value of which is not established by the pricing service utilized by the Trustee, the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times): the average of the bid and asked prices for such investment so published on or most recently prior to such time of determination; (iii) as to investments (A) the value of which is not established by the pricing service utilized by the Trustee and (B) the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times: the average bid price at such time of determination for such investment by any 2 nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service; (iv) with respect to certificates of deposit and bankers’ acceptances, means the face amount thereof, plus accrued interest; (v) with respect to agreements described in items (xi) and (xii) of the definition of Permitted Investments that permit the Borrower to withdraw amounts invested thereunder at any time without penalty, the amount available to be withdrawn therefrom; and (vi) with respect to any investment not specified above, means the value thereof established by prior agreement between the Trustee and the Borrower.

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APPENDIX D

SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS

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APPENDIX D

SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS

The following summaries of certain of the Bond Documents do not purport to be comprehensive or definitive statements of the provisions of such Bond Documents and prospective purchasers of the Series 2019 Bonds are referred to the complete texts of such documents, copies of which are available upon request from the Underwriter prior to the issuance and delivery of the Series 2019 Bonds and from the Trustee after the issuance and delivery of the Series 2019 Bonds.

THE INDENTURE

Introduction

The Indenture will be a contract for the benefit of the Owners that will specify the terms and details of the Series 2019 Bonds and which will define the security therefor.

Establishment of Funds

The following trust funds will be established with the Trustee under the Indenture:

Revenue Fund Bond Fund Redemption Fund Issuance Cost Fund Construction Fund Debt Service Reserve Fund Repair and Replacement Fund Insurance and Condemnation Funds Operations Contingency Fund Surplus Fund Rebate Fund Secondary Reserve Fund

Revenue Fund (Section 501)

In the Loan Agreement, the Borrower will agree to deliver, or cause to be delivered to the Trustee, not less frequently than the 15th of the month following collection of the Pledged Revenues, for deposit in the Revenue Fund, all Pledged Revenues received by it in the form of cash, checks, or negotiable instruments. The amounts deposited into the Revenue Fund will be transferred or paid by the Trustee to the following Funds and/or Persons in the order and amounts and on the dates indicated below.

(a) The Trustee shall transfer amounts to the Bond Fund, as follows:

(i) on or before February 20, 2019, and on or before the 20th day of each month thereafter to and including June 20, 2019, (A) a sum equal to 1/5th of the amount payable on July 1, 2019, as interest on the Series 2019 Bonds, or (B) such lesser amount that, together with amounts already on deposit in the Bond Fund and available therefor, is sufficient to pay interest on the Series 2019 Bonds to become due on July 1, 2019, as provided in the Indenture;

(ii) on or before July 20, 2019, and on or before the 20th day of each month thereafter, to and including June 20, 2058, (A) a sum equal to 1/6th of the amount payable on the immediately succeeding Interest Payment Date as interest on the Series 2019 Bonds, or (B) such lesser amount that, together with amounts already on deposit in the Bond Fund and available therefor, is sufficient to pay interest on the

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Series 2019 Bonds to become due on the immediately succeeding Interest Payment Date, as provided in the Indenture;

(iv) on or before July 20, 2021, and on or before the 20th day of each month thereafter, to and including June 20, 2058, a sum equal to the sum of (A) 1/12th of the principal due on the immediately succeeding July 1 that is a maturity date of the Series 2019 Bonds and (B) 1/12th of the Mandatory Sinking Fund Redemption Requirement;

(vi) on the Business Day immediately preceding any date on which the Series 2019 Bonds are to be redeemed pursuant to the mandatory redemption provisions of the Indenture (other than mandatory sinking fund redemption), an amount equal to the Redemption Price of the Series 2019 Bonds to be redeemed (taking into account amounts then on deposit in the Bond Fund and the Redemption Fund available to be used for the payment of such Series 2019 Bonds to be redeemed); and

(b) The Trustee shall transfer amounts to the Rebate Fund and the Account(s) therein, as follows: on the dates that the Borrower provides any calculation of the Rebate Amount to the Trustee in accordance with the Indenture, the amounts determined by the Borrower to be equal to the excess, if any, of the Rebate Amount so calculated over the amount then in the Rebate Fund;

(i) an amount equal to the annual fee of the Trustee for the Ordinary Services of the Trustee rendered, and the Ordinary Expenses of the Trustee incurred, under the Indenture and under the other Bond Documents, as and when the same become due,

(ii) the reasonable fees and charges of the Trustee, as bond registrar and paying agent, and of any other paying agents on the Bonds for acting as paying agents as provided in the Indenture, as and when the same become due, and

(iii) the reasonable fees and charges of the Trustee for the Extraordinary Services of the Trustee rendered by it, and the Extraordinary Expenses of the Trustee incurred by it, under the Indenture and under the other Bond Documents, as and when the same become due; provided, that the Borrower will be permitted, without creating an Event of Default under the Indenture, to contest in good faith the reasonableness of any such Extraordinary Services of the Trustee and Extraordinary Expenses of the Trustee and the reasonableness of any such fees, charges, or expenses;

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(d) The Trustee will pay to the Authority any and all Authority Additional Authority Payments that may come into the Trustee’s possession promptly on receipt thereof from the Borrower and receipt of evidence that such Authority Additional Payments are due, which payments shall be paid to the Authority at the address specified in the Indenture for notice to the Authority or as otherwise directed by the Authority; except that payments of the Authority’s Annual Fee will be remitted to the Authority at the times specified in the Loan Agreement;

(e) The Trustee shall transfer amounts to the Operating Account, as follows: on the 20th day of each month for deposit into the Operating Account, an amount equal to the greater of (A) the amount budgeted in the Annual Budget for Expenses (other than Subordinated Expenses or those Expenses provision for the payment of which has otherwise been made as described under this heading or under the heading “Surplus Fund” below) for the immediately succeeding month or (B) such other amount, if any, relating to either (i) Expenses (other than Subordinated Expenses) budgeted in the Annual Budget for a different period or (ii) unbudgeted expenses related to capital expenditures or repairs and replacement in respect of the Project that are payable out of amounts in the Operations Contingency Fund, specified in prior written instructions provided to Trustee by Borrower and approved by the University, which Borrower written instructions shall include a certification of the Borrower that, after payment of such other amounts, there are sufficient funds in the Bond Fund, the Revenue Fund and the Operations Contingency Fund to pay the Debt Service Payments coming due under the Indenture on the next succeeding Bond Payment Date; and provided further, for clarification, unless the Trustee receives written instructions under this provisions of clause (B) of this paragraph prior to the date transfers are to be made under the provisions described in paragraph (a) above, the Trustee will transfer amounts to the Operating Account in accordance with the provisions of the Indenture described in clause (A) of this paragraph;

(f) The Trustee shall transfer amounts to the Debt Service Reserve Fund, as follows: if any amounts are withdrawn from the Debt Service Reserve Fund, or there is a diminution in Value of the cash and investments held in the Debt Service Reserve Fund as of any Valuation Date, or if any net losses result from the investment of amounts held in the Debt Service Reserve Fund that reduce the Value of the cash and investments in the Debt Service Reserve Fund to less than the Debt Service Reserve Requirement as of any Valuation Date, beginning on the 20th day of the month following notice from the Trustee of such withdrawal, diminution in Value, or losses, and on the 20th day of each month thereafter, 12 consecutive monthly payments, each equal to 1/12th of the amount of such withdrawal, diminution in Value, or losses, including any amounts owing to the Series 2019 Bond Insurer on account of a draw on the Series 2019A Reserve Policy, in all instances necessary to restore the Debt Service Reserve Fund to the Debt Service Reserve Requirement;

(g) Except as specifically provided in paragraph (j) below with respect to the Parking Facility Account, the Trustee shall transfer amounts to the Repair and Replacement Fund, as follows: (i) if any funds shall have been withdrawn from the Repair and Replacement Fund (including the Parking Facility Account therein) to pay Debt Service Payments in accordance with the Indenture, there will be transferred to the Repair and Replacement Fund (including the Parking Facility Account, if applicable), beginning on the 20th day of the month following arty such withdrawal and continuing on the 20th day of each month thereafter the greater of (i) the lesser of (A) 1/12th of the amount of such withdrawal, or (B) such amount that is necessary to reimburse the Repair and Replacement Fund for all such withdrawals, or (ii) such amount as shall be directed by the Borrower in writing by the Borrower; and (ii) commencing on the 20th day of the first month following the Completion Date for Building 100 and the Completion Date for any additional Student Housing Facility hereunder, to the Repair and Replacement Fund an amount in equal monthly installments necessary to equal the Repair and Replacement Fund Requirement (or portion thereof for the partial Annual Period in which Building 100 or any additional Student Housing Facility, as the case may be, is completed) set forth in the Indenture (as such exhibit may be amended to include additional Student Housing Facilities) and any and all additional amounts required to be deposited therein following a Periodic Project Assessment in accordance with the Indenture or by any amendment or amendments to the Loan Agreement executed in connection with the issuance of Additional Bonds;

(h) Following the issuance of Additional Bonds under the Indenture, and a corresponding amendment or amendments to the Loan Agreement to reflect the issuance of such Additional Bonds, the Trustee shall transfer to the appropriate fund or funds set forth above any and all additional amounts required to be deposited into such fund or funds on the date(s) specified therein; and

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(i) Provided no Event of Default has occurred and is then continuing, on the last Business Day of each month the Trustee shall transfer any amounts remaining in the Revenue Fund to the Operations Contingency Fund. Amounts in the Operations Contingency Fund shall be used as set forth below under the heading “Operations Contingency Fund,” and amounts remaining in the Operations Contingency Fund shall be transferred annually to the Surplus Fund in accordance with the Indenture.

(j) Notwithstanding the provisions of paragraph (g) above, amounts paid by the Borrower or the University on behalf of the Borrower to the Trustee to satisfy the Parking Facility Repair and Replacement Requirement as set forth in the Loan Agreement shall be deposited directly to the Parking Facility Account of the Repair and Replacement Fund.

Bond Fund (Section 502)

The Bond Fund, the fund into which the monthly transfers described above under the heading “Revenue Fund,” monthly payments derived from the Loan Agreement, and certain other amounts specified in the Indenture will be deposited, will be maintained with the Trustee. Subject to the provisions of the Indenture described below under this heading or under the headings or subheading “Amounts Remaining in Funds and Accounts,” “Application of Funds,” and “The Trustee - Trustee’s Fees and Expenses,” money on deposit in the Bond Fund will be used solely to pay Debt Service Payments on the Bonds. However, upon the occurrence of an Event of Default under the Indenture, the Trustee will be permitted to use money in the Bond Fund for the benefit of the Bondholders and to pay the fees and expenses of the Trustee prior to making any payment to the Bondholders.

Within the Bond Fund, there will be created two separate subaccounts to be designated the “2019A Bond Fund Subaccount” and the “2019B Bond Fund Subaccount.” The Trustee will also establish separate subaccounts within the Bond Fund with respect to each Series, or, if applicable, Subseries of Additional Bonds. On any date Debt Service Payments on the Bonds are due (other than principal of Bonds to be paid from money in the Redemption Fund” and described under the heading “Redemption Fund” below), the Trustee will withdraw money from the Bond Fund sufficient to make such Debt Service Payment and will make such Debt Service Payment to the Owner of such Bond entitled thereto.

Within the Bond Fund, there will be created an account to be designated the “Capitalized Interest Account.” See “Estimated Sources and Uses of Funds” in the Official Statement. In connection with the issuance of the Series 2019 Bonds, there are also hereby created by the Authority and ordered established two separate subaccounts within the Capitalized Interest Account to be designated, respectively, the “2019A Subaccount” and the “2019B Subaccount.” The Trustee will also establish separate subaccounts within the Capitalized Interest Account with respect to each Series, or, if applicable, each Subseries of Additional Bonds.

On each date that transfers to the Bond Fund are required by the provisions of the Indenture described in items (i), (ii), or (iii) of clause (a) under the heading “Revenue Fund” above while there are funds on deposit in the Capitalized Interest Account, the Trustee will be required to transfer (a) from the 2019A Subaccount of the Capitalized Interest Account to the Series 2019A Bond Fund Subaccount the lesser of (i) an amount equal to any such transfer required in respect of the Series 2019A Bonds on that date, or (ii) the amount remaining in the 2019A Subaccount of the Capitalized Interest Account, (b) from the 2019B Subaccount of the Capitalized Interest Account to the Series 2019B Bond Fund Subaccount the lesser of (i) an amount equal to any such transfer required in respect of the Series 2019B Bonds on that date or (ii) the amount remaining in the 2019B Subaccount of the Capitalized Interest Account, and (c) from any other subaccount of the Capitalized Interest Account created in respect of a Series or Subseries of Additional Bonds to the corresponding subaccount of the Bond Fund the lesser of (i) an amount equal to any such transfer required in respect of such Series or Subseries of Bonds on that date or (ii) the amount remaining in such subaccount. Amounts in the 2019A Subaccount will not be used to pay interest on the Series 2019B Bonds.

On the written request of the Borrower, all of the proceeds of the Series 2019 Bonds, or any portion thereof designated in writing by the Borrower, remaining in the 2019A Subaccount and the 2019B Subaccount of the Capitalized Interest Account on the Series 2019 Completion Date will be transferred to the corresponding (by Series and Subseries) accounts of the Construction Fund and used for the payment of the Costs of the Project.

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On the occurrence of an Event of Default, the Trustee may use money in the Bond Fund to pay the reasonable fees and expenses of the Trustee prior to the making of any payments to the Bondholders.

If on any Bond Payment Date there are insufficient funds in the Bond Fund and the Redemption Fund available therefor to pay Debt Service Payments on the Bonds then due, the Trustee will transfer to the Bond Fund an amount equal to such insufficiency from the following funds in the following order of priority: first, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund), second, the Operations Contingency Fund, third, the Repair and Replacement Fund, and fourth, the Debt Service Reserve Fund.

Redemption Fund (Section 503)

The Redemption Fund will be a trust fund into which money will be required to be deposited prior to being used to redeem or purchase Bonds in accordance with the provisions of the Indenture. Subject to the provisions of the Indenture described below under this heading or under the headings or subheading “Amounts Remaining in Funds and Accounts,” “Application of Funds,” and “The Trustee - Trustee’s Fees and Expenses,” moneys in the Redemption Fund will be used only to pay the principal of Bonds or that portion of the Redemption Price of Bonds corresponding to principal in the manner described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption -- Other Redemptions at Par.”

The Trustee will establish a separate Account within the Redemption Fund (a) with respect to each Series of Bonds, (b) if more than one Subseries of Bonds will be issued on the same date, with respect to each such Subseries of Bonds, and (c) with respect to any amounts transferred to the Redemption Fund from the Construction Fund pursuant to the Indenture. Any amounts required to be deposited in the Redemption Fund for the redemption of a particular Series or Subseries of Bonds in accordance with any of the Bond Documents will be deposited in the applicable Account or Accounts thereof, and, prior to the occurrence of an Event of Default, any amounts in an Account of the Redemption Fund may be used only to make payments on the Subseries of Bonds in respect of which such Account was established. All amounts transferred to the Redemption Fund from the Construction Fund to redeem Bonds will be used to redeem only the principal portion thereof.

On the occurrence of an Event of Default, the Trustee may use moneys in the Redemption Fund to pay the reasonable fees and expenses of the Trustee prior to the making of any payments to the Bondholders.

Issuance Cost Fund (Section 504)

The Issuance Cost Fund will be a trust fund used to pay the Acquisition Fee and Issuance Costs. Within the Issuance Cost Fund, there are created two separate Accounts to be designated, respectively, the “2019A Account” and the “2019B Account.” The 2019A Account will be funded with the proceeds of the sale of the Series 2019A Bonds and the 2019B Account will be funded with the proceeds of the sale of the Series 2019B Bonds. See “Estimated Sources and Uses of Funds” in the Official Statement. Amounts held in the 2019A Account of the Issuance Cost Fund will be disbursed by the Trustee to pay Issuance Costs and amounts held in the 2019B Account of the Issuance Cost Fund will be disbursed by the Trustee to pay Issuance Costs or the Acquisition Fee, in each case upon receipt of a requisition for payment executed by the Authorized Borrower Representative setting forth the nature of the Issuance Costs or, only with respect to the 2019E Account, the Acquisition Fee, to be paid and the name of the payee and certifying that the amounts being paid are properly includable within the definition of Issuance Costs or, with only with respect to the 2019B Account, the Acquisition Fee. If any funds remain in the 2019A Account of the Issuance Cost Fund or the 20I9B Account of the Issuance Cost Fund on the earlier of the receipt by the Trustee of a certificate of the Borrower stating that all. Issuance Costs relating to the Series 2019 Bonds have been paid or the first anniversary of the Closing Date, the Trustee will transfer any funds remaining in the 2019A Account of the Issuance Cost Fund to the 2019A Account of the Construction Fund and any funds remaining the 2019B Account of the Issuance Cost Fund to the 2019A Account of the Construction Fund.

Construction Fund (Section 505)

A portion of the proceeds of the Series 2019A Bonds will be deposited in the Construction Fund. See “Estimated Sources and Uses of Funds” in the Official Statement. Within the Construction Fund, there is created a

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separate Account to be designated the “2019A Account.” Money in the Construction Fund will be applied to payment of the Costs of the Project. All proceeds of the Series 2019 Bonds and investment earnings thereon or any other funds deposited to and remaining in the 2019A Account of the Construction Fund on the Series 2019 Completion Date, less amounts retained or set aside to meet costs not then due and payable or that are being contested, will be required to be used for other capital expenditures approved in writing by the University with the written consent of the Borrower or held in the Construction Fund to pay costs of any Projects to be financed with Additional Bonds issued under the Indenture; provided, however, that a Favorable Opinion of Bond Counsel with respect to the Series 2019A Bonds and such expenditures is obtained with respect to any such use of proceeds of the Series 2019A Bonds. If there are no such additional capital expenditures relating to the Series 2019 Project or any other Project, or insufficient capital expenditures to exhaust the excess amounts in the 2019A Account of the Construction Fund, the Borrower and the University may direct the Trustee to transfer such excess (i) to the Bond Fund to be used for the payment of principal of the Series 2019A Bonds, provided the Borrower will deliver to the Trustee a Favorable Opinion of Bond Counsel or (ii) if the Borrower fails to deliver such an opinion, to the Redemption Fund to be used to redeem Series 2019A Bonds in the manner described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption — Optional Redemption” on the first date that the Series 2019 Bonds may be redeemed at a Redemption Price equal to 100% of the principal amount thereof being redeemed plus interest accrued to the redemption date.

Moneys in the Construction Fund will be permitted to be disbursed by the Trustee only upon receipt of a requisition executed by an Authorized Borrower Representative and an Authorized University Representative, in which the Borrower shall have certified that the expenditures are proper charges against the Construction Fund as described in the Indenture.

Upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the 2019A Account of the Construction Fund will not be disbursed, and, if the Series 2019 Bond Insurer and Borrower so direct, will be applied to the Debt Service Payments or redemption price of Series 2019 Bonds.

Debt Service Reserve Fund (Section 506)

Under the Indenture, a Debt Service Reserve Fund will be created. Within the Debt Service Reserve Fund, there will be established two separate Accounts to be designated, respectively, the “Tax-Exempt Account” and the “Taxable Account.” The Tax-Exempt Account will be funded initially with the Series 2019A Reserve Policy and a portion of the proceeds from the sale of the Series 2019A Bonds, such that an amount equal to the initial Debt Service Reserve Requirement for the Series 2019A Bonds is on deposit in the Debt Service Reserve Fund on and as of the Closing Date. The Taxable Account will be funded initially with a portion of the proceeds from the sale of the Series 2019B Bonds, such that an amount equal to the Debt Service Reserve Requirement for the Series 2019B Bonds is on deposit in the Debt Service Reserve Fund on and as of the Closing Date.

Under the Indenture, the Trustee will be authorized to transfer to the Bond Fund amounts held in the Tax- Exempt Account of the Debt Service Reserve Fund to pay the Debt Service Payments then due on the Series 2019A Bonds and on any Additional Bonds that are Tax-Exempt Bonds to the extent that there are insufficient funds for such purposes in the Bond Fund, the Redemption Fund, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund), the Operations Contingency Fund and the Repair and Replacement Fund available therefor on the date such Debt Service Payments are due. The Trustee will be authorized to transfer to the Bond Fund amounts held in the Taxable Account of the Debt Service Reserve Fund to pay the Debt Service Payments then due on the Series 2019B Bonds and on any Additional Bonds that are Taxable Bonds to the extent that there are insufficient funds for said purposes in the Bond Fund, the Redemption Fund, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund), the Operations Contingency Fund and the Repair and Replacement Fund available therefor on the date such Debt Service Payments are due. Amounts in the Tax-Exempt Account of the Debt Service Reserve Fund may not be used to pay Debt Service Payments on the Taxable Bonds, and amounts in the Taxable Account of the Debt Service Reserve Fund may not be used to pay Debt Service Payments on the Tax-Exempt Bonds.

Any withdrawals for this purpose from the Debt Service Reserve Fund will be required to be restored by payments of Reserve Loan Payments by the Borrower. See “The Loan Agreement — Reserve Loan Payments”

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herein. If Additional Bonds are issued, the Debt Service Reserve Fund will be required to be increased by an amount equal to the Debt Service Reserve Requirement, if any, for such Additional Bonds.

On the final maturity date of any Tax-Exempt Bonds, any money in the Debt Service Reserve Fund will be permitted to be used upon receipt of written instruction from the Borrower to pay the Debt Service Payments on such Bonds on such final maturity date. On the final maturity date of any Taxable Bonds, any money in the Taxable Account of the Debt Service Reserve Fund shall be transferred, on receipt of written instruction from the Borrower, to pay Debt Service Payments on such Bonds on such final maturity date. In the event of the redemption of the Bonds in whole, any money in the Debt Service Reserve Fund will be transferred upon receipt of written instruction from the Borrower to the Bond Fund and applied to the payment of the principal of and premium, if any, on the Bonds.

Subject to the provisions of the Indenture described in the immediately succeeding paragraph, if, as a result of the valuation of the investments held in the Debt Service Reserve Fund as of any Valuation Date, the balance of the Debt Service Reserve Fund is greater than the Debt Service Reserve Requirement for the Bonds, all amounts in the Debt Service Reserve Fund in excess of the Debt Service Reserve Requirement for the Bonds will be transferred to the Bond Fund and used to make Debt Service Payments of the Bonds; provided, however, if (i) on any date on which all or any portion of a Series or Subseries of Bonds are defeased in accordance with the provisions of the Indenture described below under the heading “Discharge of Lien” the balance of the Debt Service Reserve Fund is greater than the Debt Service Reserve Requirement (after such defeasance) and (ii) the Borrower shall give written instructions to the Trustee, all amounts in the Debt Service Reserve Fund in excess of the Debt Service Reserve Requirement (after such defeasance) will be permitted to be used to pay the principal of or premium, if any, on the defeased Bonds or, if the Borrower provides the Authority and the Trustee with a Favorable Opinion of Bond Counsel, in such other manner as shall be directed by the Borrower.

Notwithstanding the provisions of the Indenture described in the two immediately preceding paragraphs, during any period in which the Series 2019A Bonds are the only Tax-Exempt Bonds Outstanding under the Indenture, (i) on the payment in full or defeasance of the Series 2019B Bonds, all amounts in the Taxable Account of the Debt Service Reserve Fund will, subject to the provisions of item (ii) of this paragraph, be transferred to the Tax-Exempt Account of the Debt Service Reserve Fund, (ii) no transfer will be made from the Tax-Exempt Account of the Debt Service Reserve Fund to the Bond Fund in accordance with the provisions of the Indenture described in the immediately preceding paragraph unless and until the balance of the Tax-Exempt Account of the Debt Service Reserve Fund is greater than the least of (a) 10% of the stated principal amount of the Series 2019A Bonds (less any original issue discount that exceeds a de minimis amount), (b) 125% of the Annual Debt Service on the Series 2019A Bonds from the date of calculation to the final maturity thereof or (c) the Maximum Annual Debt Service on the Series 2019A Bonds (as all of such calculations are certified to the Trustee by the Underwriter) and (iii) no transfers will be made from the Taxable Account of the Debt Service Reserve Fund to the Bond Fund in accordance with the provisions of the Indenture described in the immediately preceding paragraph prior to the payment in full or defeasance of the Series 2019B Bonds.

In lieu of or in addition to cash or investments, at any time the Borrower may cause to be deposited to the credit of an Account in the Debt Service Reserve Fund any form of a reserve fund credit facility (the “Credit Facility”), in the amount of any or all of the related Debt Service Reserve Requirement, irrevocably payable to the

Trustee as beneficiary for the Owners of the related Bonds, provided that the Trustee has received evidence satisfactory to it that (i) at the time of the initial delivery of the Credit Facility, the issuer thereof has a credit rating in one of the three highest credit rating categories by a nationally recognized securities rating agency or service, (ii) the term of the Credit Facility is at least 24 months, (iii) except as provided in the next sentence of this subsection, the only condition to a drawing under the Credit Facility is insufficient amounts in the applicable Funds and Accounts held by the Trustee with respect to the related Bonds when needed to pay debt service on such Bonds or the expiration of the Credit Facility, and (iv) the Credit Provider shall notify the Borrower and the Trustee at least 12 months prior to expiration of the Credit Facility unless the Credit Facility expires on the final maturity of the Bonds for which it was issued. If (a) the Borrower receives such expiration notice and the Credit Provider does not extend the expiration date of the Credit Facility or (b) the Borrower receives notice of the termination of the Credit Facility, the Borrower will (A) provide a substitute Credit Facility that meets the requirements set forth in the foregoing sentences, (B) deposit monies to the applicable Debt Service Reserve Requirement to the related Account in the

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Debt Service Reserve Fund (1) in the manner provided in the indenture supplemental to the Indenture pursuant to which such Bonds are issued or (2) prior to the termination date in the case of receipt of a termination notice, or (C) instruct the Trustee to draw on such Credit Facility in the amount of the related Debt Service Reserve Requirement (1) in the manner provided in the indenture supplemental to the Indenture pursuant to which such Bonds are issued or (2) prior to the termination date in the case of receipt of a termination notice, and deposit such drawing to such Account in Debt Service Reserve Fund.

In conjunction with the issuance of the Series 2019 Bonds, the Series 2019A Reserve Policy is being issued as a Credit Facility above in partial satisfaction of the Debt Service Reserve Requirement for the Series 2019A Bonds. No Credit Facility (other than the Series 2019A Reserve Policy) may be credited to the Debt Service Reserve Fund in lieu of cash and other investments without the prior written consent of the Series 2019 Bond Insurer.

Repair and Replacement Fund (Section 507)

The Repair and Replacement Fund will be a trust fund into which the Borrower will be required to make monthly deposits. See “The Loan Agreement -- Loan Payments and Other Amounts Payable” herein. Within the Repair and Replacement Fund, there will be established a separate account to be designated the “Parking Facility Account.” Except as set forth below with respect to the Parking Facility Account, the Trustee will deposit funds into the Repair and Replacement Fund in accordance with the provisions of the Indenture described in paragraph (e) in “Revenue Fund” above. The Trustee will deposit into the Parking Facility Account as and when received by the Trustee any money paid under the Loan Agreement or the Indenture for credit or transfer to the Parking Facility Account of the Repair and Replacement Fund. The moneys in the Repair and Replacement Fund will be disbursed by the Trustee to pay (i) the maintenance and repair costs related to the Student Housing Facilities that the Borrower will be obligated to pay pursuant to the Loan Agreement or, to the extent that the Net Proceeds are insufficient for such purposes, to the costs of restoration or replacement of the Project (or any portion thereof) pursuant to the Loan Agreement and (ii) the Debt Service Payments on the Bonds to the extent there are insufficient funds in the Bond Fund, the Redemption Fund, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund) and the Operations Contingency Fund available therefor on the date such Debt Service Payments are due. The funds in the Parking Facility Account will be disbursed by the Trustee to pay (i) maintenance and repair costs related to the Parking Facility that the Borrower or the University is obligated to pay pursuant to the provisions of the Loan Agreement described in the last paragraph under the heading “Maintenance and Modification of Project by the Borrower; Additions or Alterations” herein or, to the extent that the Net Proceeds are insufficient for such purposes, to the costs of restoration or replacement of the Project (or any portion thereof) pursuant to the Loan Agreement and (ii) the Debt Service Payments on the Bonds to the extent there are insufficient funds in the Bond Fund, the Redemption Fund, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund) and the Operations Contingency Fund available therefor on the date such Debt Service Payments are due.

Funds in the Parking Facility Account in the Parking Facility Account of the Repair and Replacement Fund may be delivered to the University to make scheduled capital improvements to the Parking Facility as required by the Parking Facility Lease, the Ground Lease and the Loan Agreement. In addition, in the event the University exercises its option to purchase the Parking Facility in accordance with the terms of the Ground Lease, amounts in the Parking Facility Account shall, at the request of the University and upon requisition of the Borrower, be released and applied to the purchase price of the Parking Facility.

Insurance and Condemnation Funds (Section 508)

The Insurance Fund and the Condemnation Fund will be trust funds into which, under certain circumstances, the Net Proceeds of insurance and condemnation awards, respectively, will be deposited and used to repair, rebuild, restore, or replace the Project or to prepay Basic Loan Payments. Moneys in the Insurance Fund or the Condemnation Fund that are used to repair, rebuild, restore, or replace the Project will be disbursed substantially in accordance with the procedures for making disbursements under the Construction Fund. See “The Loan Agreement — Destruction and Damage” and “— Condemnation” herein.

The Trustee will also establish a separate Account within the Insurance Fund and within the Condemnation Fund with respect to each Series of Additional Bonds issued under the Indenture. Any amounts required to be

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deposited in the Insurance Fund or in the Condemnation Fund in accordance with the Loan Agreement will be deposited in the applicable Account thereof, and, prior to the occurrence of an Event of Default, any amounts in an Account of the Insurance Fund or the Condemnation Fund may be used only to restore that portion of the Project in respect of which such Account was established, to acquire land and/or improvements in substitution for that portion of the Project in respect of which such Account was established, or to make payments on the Series of Bonds in respect of which such Account was established.

Operations Contingency Fund (Section 509)

The Operations Contingency Fund will be a trust fund into which money remaining in the Revenue Fund, after the disbursements described above under the heading “Revenue Fund,” will be transferred. Amounts held in the Operations Contingency Fund shall he available to the Trustee on a monthly basis to make the monthly credits or deposits required from the Revenue Fund under the Indenture. Money in the Operations Contingency Fund may be used to pay Expenses of, or to make capital expenditures or repairs and replacements in respect of, the Project which are not included in the Annual Budget (provided, the Manager determines, and certifies in writing to the Trustee that, after payment of such Expenses or such capital expenditures or repairs and replacements, there are sufficient funds in the Bond Fund, the Revenue Fund and the Operations Contingency Fund to pay the Debt Service Payments coming due under the Indenture on the next succeeding Bond Payment Date). Moneys in the Operations Contingency Fund may also be used to pay Debt Service Payments to the extent that there are insufficient funds in the Revenue Fund, the Bond Fund, the Redemption Fund, and the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund) available therefor on such date. So long as no liabilities or obligations of the Borrower, whether budgeted or unbudgeted, are then due and unpaid as of June 30 of each Annual Period (based on a certificate of the Manager or the Borrower, as appropriate), the Trustee shall, within five Business Days after such June 30, (i) retain an amount equal to 25% of the aggregate Expenses reflected in the Annual Budget (as specifically identified in written instructions provided by an Authorized. Borrower Representative identifying such aggregate expense number in the Annual Budget) for the following Annual Period in the Operations Contingency Fund, and (ii) transfer all amounts remaining in the Operations Contingency Fund in excess of the amount described in clause (i) of this sentence to the Surplus Fund.

Surplus Fund (Section 510)

The Surplus Fund will be a trust fund into which moneys remaining in the Operations Contingency Fund will be transferred in accordance with the procedure specified under the heading “Operations Contingency Fund” above.

Provided (i) no Event of Default has occurred and is continuing, (ii) all amounts withdrawn from the Repair and Replacement Fund to pay Debt Service Payments on the Bonds in accordance with the Indenture are reimbursed in full, (iii) all amounts required to restore the Debt Service Reserve Fund to the Debt Service Reserve Requirement are paid in full, and (iv) all amounts for any unbudgeted operating expenses, capital expenditures or repair and replacement of Equipment or other components of the Project that have been incurred for the Project and are then due and owing have been paid in full, on receipt by the Trustee of the annual financial statements and Audit Report for the most recently. ended Annual Period, the Trustee will transfer money on deposit in the Surplus Fund pursuant to the fourth paragraph under this heading..

Money in the Surplus Fund (including the Restricted Account of the Surplus Fund) may be used to make the transfers and deposits required under the heading “Revenue Fund,” and the Authority will authorize and direct the Trustee to withdraw funds from the Surplus Fund to make such transfers and deposits to the extent that there are insufficient funds in the Revenue Fund, the Bond Fund, and the Redemption Fund available therefor on such date.

After any transfers pursuant to the second and third paragraphs in this section are made, if the annual financial statements, Audit Report, and accompanying calculation indicate a Fixed Charges Coverage Ratio of at least 1.20, pursuant to written instructions provided to the Trustee by the Authorized Borrower Representative and approved by the University (which shall include specific information regarding the calculation of the Fixed Charges Coverage Ratio specific amounts to be transferred), the Trustee will transfer (1) to the Secondary Reserve Fund, all amounts in the Surplus Fund (including any amounts in the Restricted Account of the Surplus Fund) up to the amount indicated in the Annual Budget for the preceding year as the amount to be transferred to the Secondary

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Reserve Fund to pay Subordinated Expenses, and (2) all remaining amounts in the Surplus Fund (including any amounts in the Restricted Account of the Surplus Fund) to Beyond Owners Group for any unpaid portion of the annual payment of three quarters of one percent (0.75%) of the sum of the gross receipts and operating and non- operating revenues derived by the Borrower from the ownership or operation of the Student Housing Facility required under the Ground Lease, then to the Borrower for payment of rent due to the University as required by the terms of the Ground Lease; provided, however, the Trustee will not make the initial transfer of any money on deposit in the Surplus Fund until the Borrower has certified that the Student Housing Facilities have a Fixed Charges Coverage Ratio of at least 1.20, commencing in the Annual Period in which the Completion Date occurs; provided that, to the extent that the calculations of the Fixed Charges Coverage Ratio provided by the Borrower to the Trustee indicate that Capitalized Interest was required to be included in Revenue Available for Fixed Charges in order to have a Fixed Charges Coverage Ratio of at least 1.20, all amounts up to the amount equal to the Capitalized Interest so required will be retained in the Restricted Account of the Surplus Fund and only funds in excess of such amount may be transferred as described above in this paragraph.

To the extent any amounts in the Surplus Fund may not be transferred or distributed as described in the two immediately preceding paragraphs, all such amounts will be transferred to the Restricted Account of the Surplus Fund and will remain therein until such time as (i) the Borrower demonstrates, by the delivery of annual financial statements, an Audit Report, and an accompanying calculation, a Fixed Charges Coverage Ratio of at least 1.20 (treating any Capitalized Interest as set forth in the preceding paragraph), or (ii) such funds are otherwise applied in accordance with the Indenture.

Amounts Remaining in Funds and Accounts (Section 514)

Any amounts remaining in the Revenue Fund, the Bond Fund, the Redemption Fund, the Issuance Cost Fund, the Construction Fund, the Debt Service Reserve Fund, the Repair and Replacement Fund, the Insurance Fund, the Condemnation Fund, the Operations Contingency Fund, the Surplus Fund, the Secondary Reserve Fund or any other Fund, Account, or reserve created under the Indenture, with the exception of the Rebate Fund, after payment in full of the Debt Service Payments on the Bonds (or provision for payment thereof as provided in the Indenture), the reasonable fees, charges, and expenses of the Trustee, any paying agents, and all fees, charges, and expenses of the Authority, the amounts required to be paid to the United States pursuant to the Loan Agreement, and all other amounts required to be paid under the Indenture (including, without limitation, any and all Additional Loan Payments), will be promptly paid to the University.

Rebate Fund (Section 511)

(a) The Rebate Fund will be a trust fund established for the purpose of complying with §148 of the Code and the Regulations promulgated thereunder. The money deposited in the Rebate Fund, together with all investments thereof and investment income therefrom, will be held in trust and applied solely as described under this heading. The Rebate Fund will not be a portion of the Trust Estate and will not be subject to the lien of the Indenture. Amounts in the Rebate Fund shall not be used to make Debt Service Payments.

(b) There will be deposited in each Account of the Rebate Fund as and when received (i) moneys required to be paid by the Borrower pursuant to the provisions of the Loan Agreement described above in (b)(i)(C) under the heading “The Loan Agreement - Loan Payments and Other Amounts Payable — Additional Loan Payments,” (ii) moneys transferred from the Surplus Fund, the Operations Contingency Fund, the Debt Service Reserve Fund, the Repair and Replacement Fund, the Issuance Cost Fund, the Construction Fund, and/or the Bond Fund pursuant to the provisions described in (f) below, and (iii) all other money received by the Trustee when accompanied by directions not inconsistent with the Loan Agreement or the Indenture that such money is to be paid into the Account of the Rebate Fund designated therein.

(c) With respect to each Series of Tax-Exempt Bonds, promptly after each Calculation Date, and not later than 30 days after all Bonds of such Series is Discharged, the Borrower will engage, and furnish information to, the Rebate Analyst and cause the Rebate Analyst to calculate the Rebate Amount with respect to such Series of Tax- Exempt Bonds. The Borrower will provide, or cause the Rebate Analyst to provide, to the Authority and Trustee a copy of the report of the Rebate Analyst. The Trustee will determine if the amount in the applicable Account(s) of the Rebate Fund is then equal to the calculated Rebate Amount. If the amount in such Account(s) of the Rebate Fund

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is in excess of the amount required to be therein in accordance with the report of the Rebate Analyst, then such excess will be transferred to the Bond Fund. If the amount in such Account(s) of the Rebate Fund is less than the amount required to be deposited therein, the Trustee will transfer to such Account(s) of the Rebate Fund such amounts as is necessary to reserve for the anticipated Rebate Amount payment to the United States Treasury from the Revenue Fund in accordance with the provisions of the Indenture described above in (h) under the heading “Revenue Fund.”

(d) If at any time the Borrower shall be required to retain the Rebate Analyst but fails to do so, then the Authority will retain a Rebate Analyst, at the expense of the Borrower (as an Expense), to calculate the Rebate Amount. If the Authority is required to retain or to pay the Rebate Analyst, then the Authority, after delivering to the Borrower a demand for payment of an amount sufficient to pay the Rebate Analyst, will direct the Trustee to withdraw such amount as may be needed to pay the Rebate Analyst from the following funds in the following order of priority: first, the Revenue Fund, second, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund), third, the Operations Contingency Fund, fourth, the Debt Service Reserve Fund, fifth, the Repair and Replacement Fund sixth, the Issuance Cost Fund, seventh, the Construction Fund, and eighth, the Bond Fund.

(e) The Trustee, on behalf of the Authority, will be directed to pay to the United States Treasury from time to time the amounts as required by the report of the Rebate Analyst, provided that the Trustee will be required to pay over to the United States Treasury: (i) at least once each five (5) years after the Closing Date of a Series of Tax-Exempt Bonds within 60 days of the date as of which the Rebate Amount shall have been calculated, an amount equal to 90% of the Rebate Amount allocable to that Series of Tax-Exempt Bonds as of such date (and not theretofore paid to the United States Treasury) and (ii) not later than 60 days after the last bond of a Series of Tax- Exempt Bonds shall have been Discharged, 100% of the Rebate Amount allocable to such Series of Tax-Exempt Bonds.

(f) If, at any time when the Trustee is required to withdraw money from any Account(s) of the Rebate Fund, the amount on deposit in such Account(s) of the Rebate Fund is insufficient for the purposes thereof, notwithstanding any investment of moneys requirements in the Indenture, the Trustee, after first delivering a demand for such deficiency to the Borrower and no money for such purpose having been provided by the Borrower, will transfer money to such Account(s) of the Rebate Fund from the following funds in the following order of priority: first, the Revenue Fund, second, the Surplus Fund (including, if necessary, the Restricted Account of the Surplus Fund), third, the Operations Contingency Fund, fourth, the Debt Service Reserve Fund, fifth, the Repair and Replacement Fund, sixth, the Issuance Cost Fund, seventh, the Construction Fund, and eighth, the Bond Fund.

(g) The Trustee will comply with the instructions contained in the Indenture and in the Tax Agreement provided that computations and payments may be made on other bases, at other times, and in other amounts, or omitted altogether, all as will be set forth in a Favorable Opinion of Bond Counsel (the “Subsequent Rebate Instructions”), even if such Subsequent Rebate Instructions are different from or inconsistent with the provisions of the Indenture described under this heading.

(h) The provisions of the Indenture described under this heading will supersede the provisions of all other Sections of the Indenture, to the end that the excludability from gross income for the purposes of federal income taxation of interest on Series of Tax-Exempt Bonds shall not be adversely affected as a result of the inadequacy at any time of the Rebate Fund, unless the total amount held by the Trustee under all Funds established hereunder shall be insufficient.

Secondary Reserve Fund

Under the Indenture, a Secondary Reserve Fund will be created. The Trustee shall deposit amounts to the Secondary Reserve Fund from the Surplus Fund as provided under the heading “Surplus Fund” above. The Secondary Reserve Fund is not a portion of the Trust Estate and is not subject to the lien of the Indenture. Amounts in the Secondary Reserve Fund will not be available to make Debt Service Payments.

Money in the Secondary Reserve Fund may be disbursed to the University and used to pay Subordinated Expenses of the University relating to the Project, and will be disbursed on receipt of a requisition for payment

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executed by an Authorized Borrower Representative, and the Trustee will be authorized to issue its checks or initiate wires in accordance with written wire instructions for each disbursement on receipt of such a requisition.

Investment of Funds and Accounts (Section 701)

Subject to the provisions of the Indenture described below under the heading “Discharge of Lien,” any moneys held by or under the control of the Trustee as part of the Revenue Fund, the Bond Fund, the Redemption Fund, the Issuance Cost Fund, the Construction Fund, the Debt Service Reserve Fund, the Repair and Replacement Fund, the Insurance Fund, the Condemnation Fund, the Operations Contingency Fund, the Surplus Fund, the Rebate Fund, reserves in connection with contested liens, other special trust funds created under the Indenture, or other Funds or Accounts held by the Trustee will be (i) invested and reinvested by the Trustee, at the written direction of an Authorized Borrower Representative in such Permitted Investments as may be designated by the Borrower, which designation will not contain directions contrary to the Tax Agreement or (ii) transferred to other Funds or Accounts as provided in the Indenture.

The Trustee is directed to sell and reduce to cash funds a sufficient amount of such investments whenever the cash balance in any Fund or Account is insufficient for the uses prescribed for money held in such Fund or Account. The Trustee may transfer investments from any Fund or Account to any other Fund or Account in lieu of cash when required or permitted by the provisions of the Indenture and the Tax Agreement. The Trustee will value the investments held in the Debt Service Reserve Fund as of the close of business on each Valuation Date and will promptly deliver copies of such valuation to the Authority and the Borrower. In computing the assets of any Fund or Account, investments and accrued interest thereon will be deemed a part thereof. The Trustee is not liable for any depreciation in the Value of any obligations in which money of Funds or Accounts is invested, as aforesaid, or for any loss arising from any investment or for any investment that does not comply with the definition of Permitted Investments. The investments so purchased and held by the Trustee and will be deemed at all times a part of the Revenue Fund, the Redemption Fund, the Bond Fund, the Issuance Cost Fund, the Construction Fund, the Debt Service Reserve Fund, the Repair and Replacement Fund, the Insurance Fund, the Condemnation Fund, the Operations Contingency Fund, the Surplus Fund, or the Rebate Fund, or the trust account described in the preceding subsection, as the case may be, and the interest accruing thereon and any profit realized therefrom will be credited as provided in Section 702, and any losses resulting from such investments will be charged to such Fund.

The Trustee may conclusively rely on the Authorized Borrower Representative’s written instructions to make the directed investments. To the extent that the Trustee has not received written directions from the Authorized Borrower Representative regarding investment of money, the Trustee will, until such written directions are received, invest such money pursuant to standing written instructions delivered to the Trustee by the Authorized Borrower Representative on the original issuance, of the Series 2019 Bonds as such written instructions may be amended from time to time; provided, however, if no such written standing instructions are received by the Trustee on the original issuance of the Series 2019 Bonds, then the Trustee will solicit written instructions from the Authorized Borrower Representative regarding investment of money, but if no such instructions are then received, the Trustee is not responsible or liable for keeping the money held by it hereunder invested.

Notwithstanding any provision of the Indenture to the contrary, the Trustee is not liable or responsible for any calculation or determination that may be required in connection with or for the purpose of complying with the provisions of §148 of the Code or any applicable Regulations, including, without limitation, the calculation of amounts required to be paid to the United States under the provisions of §148 of the Code and applicable Regulations and the fair market value of any investments made hereunder (except as provided in the Indenture with respect to the calculation of amounts on deposit in the Debt Service Reserve Fund), and the sole obligation of the Trustee with respect to the investment of funds hereunder is to invest the money received by the Trustee in accordance with the written instructions of the Authorized Borrower Representative and the further provisions of the Indenture. The Trustee has no responsibility for determining whether or not the investments made pursuant to the direction of the Authorized Borrower Representative comply with the requirements of the Loan Agreement.

The Authority acknowledges that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory agency grant to the Authority the right to receive brokerage confirmations of security transactions, the Authority waives receipt of such confirmations. The Trustee will furnish to the Authority and Borrower periodic statements that include detail of all investment transactions made by the Trustee.

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Allocation of Income from Investments (Section 702)

(a) All interest accruing from investments of moneys in the following Funds and Accounts and any profit realized therefrom will be allocated as follows:

(i) interest and profits from the investments of moneys in the Revenue Fund will be retained in the Revenue Fund;

(ii) interest and profits from the investments of moneys in the Bond Fund and in the Accounts and subaccounts therein will be retained in the Bond Fund and in such Accounts and subaccounts, respectively;

(iii) interest and profits from the investments of moneys in the Redemption Fund and any Account therein will be deposited into the Bond Fund;

(iv) interest and profits from the investments of moneys in the Accounts of the Issuance Cost Fund will be deposited into the corresponding (by Series and Subseries) Accounts of the Construction Fund;

(v) interest and profits from the investment of moneys in the Construction Fund and the Accounts therein will be retained in the Construction Fund and in such Accounts, respectively;

(vi) interest and profits from the investment of moneys in the Debt Service Reserve Fund will be deposited into the corresponding (by Series and Subseries) Account of(s) the Construction Fund during the Construction Period and thereafter, be retained in the Debt Service Reserve Fund and used in accordance with the provisions set forth in the heading “Debt Service Reserve Fund” above;

(vii) interest and profits from the investment of moneys in the Repair and Replacement Fund will be retained in the Repair and Replacement Fund;

(viii) interest and profits from the investment of moneys in the Insurance Fund and the Account(s) therein will be retained in the Insurance Fund and in such Account(s), respectively;

(ix) interest and profits from the investment of moneys in the Condemnation Fund and the Account(s) therein will be retained in the Condemnation Fund and in such Account(s), respectively;

(x) interest and profits from the investment of moneys in the Operations Contingency Fund will be retained in the Operations Contingency Fund;

(xi) interest and profits from the investment of moneys in the Surplus Fund will be retained in the Surplus Fund;

(xii) subject to provisions of the Indenture described above under the heading “Rebate Fund,” interest and profits from the investment of moneys in the Rebate Fund will be retained in the Rebate Fund; and

(xiii) interest and profits from the investment of moneys in any other Funds or Accounts will be retained in the respective Funds or Accounts unless the Trustee receives written direction of the Authorized Borrower Representative to the contrary.

(b) Notwithstanding the provisions of the Indenture described in (a) of this heading, any interest or other gain from any Fund or Account will be transferred to the Rebate Fund to the extent required on behalf of the Borrower by the provisions of the Indenture described above in (t) under the heading “Rebate Fund,” except that no such transfer shall be made from any Fund or Account if such transfer would cause the amount then on deposit in such Fund or Account to be less than required by the provisions, if any, of the Indenture.

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Trustee’s Own Bond or Investment Department (Section 703)

The Trustee may make any and all investments described under the heading “Investment of Funds and Accounts” above through its own bond or investment department.

Discharge of Lien (Section 901)

(a) When:

(i) if the Bonds or a Series or Subseries of Bonds shall have become due and payable in accordance with the terms thereof or otherwise as provided in the Indenture, the whole amount of the Debt Service Payments so due and payable on all such Bonds shall be paid, or

(ii) if the Bonds or a Series or Subseries of Bonds shall not have become due and payable in accordance with the terms thereof, but:

(A) the Trustee shall hold cash and/or Defeasance Obligations, the principal of and the interest on which, when due and payable, will, together with such cash, provide sufficient money to pay the Debt Service Payments on all such Bonds then Outstanding to the maturity date or dates of such Bonds or to the date or dates specified for the redemption thereof and the Authority will be required to cause to be delivered to the Trustee a verification or other appropriate report to such effect issued by an Accountant, and

(B) if such Bonds are to be called for redemption, irrevocable written instructions to call such Bonds for redemption shall have been given by the Authority to the Trustee, and in either of such event sufficient funds shall also have been provided or provision shall have been made for paying all other obligations payable under the Indenture with respect thereto by the Authority and the Trustee, including any Rebate Amount, then and in that case, the Bonds or such Series or Subseries of Bonds shall no longer be, or considered to be, Outstanding and the right, title, and interest of the Trustee in the Funds and Accounts, if any, established with respect to the Bonds or such Series or Subseries of Bonds will then cease, determine, and become void and, on demand of the Authority and upon being furnished with an Opinion of Counsel addressed to the Authority and the Borrower, in form and substance satisfactory to the Trustee, to the effect that all conditions precedent to the release of the Indenture or that portion, if any, of the Trust Estate relating to such Series or Subseries of Bonds shall have been satisfied, the Trustee will be required to release the Indenture or that portion, if any, of the Trust Estate relating to such Series or Subseries of Bonds, to execute such documents to evidence such release as may be reasonably required by the Authority, and will transfer any surplus in, and all balances remaining in, all such Funds and Accounts to the Ground Lessor.

(b) If Defeasance Obligations shall be deposited with and held by the Trustee as hereinabove described, (i) in addition to the requirements of the Indenture described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption -- Notice of Redemption; Cessation of Interest,” but not as a condition to defeasance, the Trustee, within thirty (30) days after such cash and/or Defeasance Obligations shall have been deposited with it, will be required to cause a notice to be mailed, postage prepaid, to all Owners of Bonds to be paid or redeemed, setting forth (A) the date or dates, if any, designated for the redemption of such Bonds, (B) a description of the Defeasance Obligations so held by it, and (C) that the Indenture or that portion, if any, of the Trust Estate relating to such Series or Subseries of Bonds has been released in accordance with the provisions of the Indenture and (ii) the Trustee will, nevertheless, retain such rights, powers, and privileges under the Indenture as may be necessary and convenient in respect of such Bonds (A) for the payment of the Debt Service Payments for which such Defeasance Obligations shall have been deposited and (B) for the registration, transfer, and exchange of such Bonds.

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Events of Default (Section 1001)

Each of the following will be an Event of Default within the meaning of the Indenture:

(a) payment of any installment of interest on any Bond is not made by or on behalf of the Authority when the same becomes due and payable (a payment by a Bond Insurer pursuant to a Bond Insurance Policy will not be considered a payment by the Authority for such purposes); or

(b) payment of the principal of or the redemption premium, if any, on any Bond is not made by or on behalf of the Authority when the same becomes due and payable, whether at maturity or by proceedings for redemption or pursuant to a Sinking Fund Requirement or otherwise (a payment by a Bond Insurer pursuant to a Bond Insurance Policy will not be considered a payment by the Authority for such purposes); or

(c) the failure to perform in a punctual manner any other of the covenants, conditions, agreements, or provisions contained in the Indenture or any agreement supplemental hereto and the continuation of such failure for 30 days after receipt by the Authority of a written notice from the Trustee specifying such failure and requiring the same to be remedied; provided, however, that if such performance requires work to be done, action to be taken, or conditions to be remedied that by their nature cannot reasonably be done, taken, or remedied, as the case may be, within such 30 day period, no Event of Default will be deemed to have occurred or to exist if, and so long as, the Authority begins such performance within such period and diligently and continuously prosecutes the same to completion and each Bond Insurer has consented to such extension in writing; or

(d) an “Event of Default” shall have occurred under any of the other Bond Documents other than the Continuing Disclosure Agreement.

Acceleration of Maturities (Section 1002)

On the happening and continuance of any Event of Default under clause (a) or (b) under the heading “Event of Default” above, the Trustee will be permitted and, on the written request of the Requisite Number of Bondholders, will be required, by notice in writing to the Authority, the Borrower, and, if the Trustee is not the Dissemination Agent, the Dissemination Agent, to declare the principal of all Bonds then Outstanding (if not then due and payable) to be due and payable immediately, and on such declaration, the same will become and be immediately due and payable. Upon such declaration, interest on the Bonds will cease to accrue, and the Trustee will be required to notify the Owners of the Bonds and each Rating Agency promptly of such declaration and that interest on the Bonds shall have ceased to accrue on and as of the date of such declaration. If at any time after the principal of the Bonds shall have been so declared to be due and payable, and before the entry of final judgment or decree in any suit, action, or proceeding instituted on account of such Event of Default, or before the completion of the enforcement of any other remedy under the Indenture, money shall have accumulated in the Bond Fund sufficient to pay the principal of all matured Bonds and all arrearages of interest, if any, on all Bonds then Outstanding (except the principal of any Bonds not then due and payable by their terms and the interest accrued on such Bonds since the last Interest Payment Date), and the charges, compensations, expenses, disbursements, advances, and liabilities of the Trustee and all other amounts then payable by the Authority under the Indenture shall have been paid or a sum sufficient to pay the same shall have been deposited with the Trustee, and every other failure known to the Trustee in the observance or performance of any covenant, condition, or agreement contained in the Bonds, in the Indenture (other than a failure to pay the principal of such Bonds then due only because of a declaration described in this paragraph), and in the other Bond Documents (other than the Continuing Disclosure Agreement) shall have been remedied to the satisfaction of the Trustee, then and in every such case, the Trustee will be permitted, and on the written request of the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Bonds not then due and payable by their terms (Bonds then due and payable only because of a declaration of acceleration will not be deemed to be due and payable by their terms), will be required, by written notice to the Authority, the Borrower, the Owners of the Bonds, each Rating Agency, and, if the Trustee is not the Dissemination Agent, the Dissemination Agent, to rescind and annul such declaration and its consequences, but no such rescission or annulment will extend to or affect any subsequent Event of Default or impair any right consequent thereon. Upon any declaration of acceleration under the Indenture, the Trustee will be required to proceed immediately to exercise such rights as it may have under the Loan Agreement to declare all payments thereunder to be immediately due and payable.

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Notwithstanding anything to the contrary above, the maturity of the Insured Series 2019 Bonds will not be accelerated without the consent of the Series 2019 Bond Insurer and in such event, the Series 2019 Bond Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the acceleration date (to the extent unpaid by the Authority), and the Trustee is required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as provided above, the Series 2019 Bond Insurer’s obligations under the Series 2019 Bond Insurance Policy with respect to such Series 2019 Bonds will be fully discharged.

Trustee May Bring Suit (Section 1003)

Whenever any Event of Default shall have occurred and be continuing, the Trustee will be permitted, and on the written request of the Requisite Number of Bondholders, will be required to proceed, subject to the provisions of the Indenture described below under the heading and subheading “Control of Proceedings by a Majority of the Bondholders” and “The Trustee - Indemnification of Trustee,” respectively, to protect and enforce its rights and the rights of the Owners under the laws of the State of Wisconsin and under the Indenture, the other Security Documents, and the Notes by such suits, actions, or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant, condition, or agreement contained in the Indenture, or in the other Security Documents or the Notes or in aid or execution of any power granted in the Indenture or for the enforcement of any proper legal or equitable remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce such rights.

Application of Funds (Section 1004)

All money received by the Trustee pursuant to any right given or action taken under the Indenture (other than amounts held in the Rebate Fund or the Secondary Reserve Fund) will (i) after payment of the reasonable costs and expenses of the proceedings resulting in the collection of such money, including the reasonable fees and expenses of the Trustee, and (ii) after the payment of fees, costs and expenses of the Authority and the Authority Indemnified Persons and any other payments due them in respect of the Unassigned Rights (including, without limitation, indemnification payments and Additional Loan Payments due to the Authority and any Authority Indemnified Persons), be deposited in the Bond Fund and applied to the payment of the Debt Service Payments on the Bonds then due and unpaid in accordance with the provisions of the Indenture; provided, that payment of amounts due to the Authority or the Authority Indemnified Persons under this paragraph will not absolve the Borrower from liability therefor except to the extent of the amounts received from the Trustee. Anything in the Indenture to the contrary notwithstanding, if at any time the money in the Bond Fund is not sufficient to pay the interest on or the principal of the Bonds as the same becomes due and payable (either by their terms or by acceleration of maturities), such money, together with any money then available or thereafter becoming available for such purpose, whether through the exercise of the remedies provided for in the Indenture or otherwise, will be applied first as set forth in clause (i) and (ii) of this paragraph and then as follows:

(a) if the principal of all Bonds shall not have become, or shall not have been declared, due and payable, all such money will be applied as follows:

first: to the payment to the Persons entitled thereto of all installments of interest on Bonds then due and payable in the order in which such installments became due and payable and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment, ratably according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or preference except as to any difference in the respective rates of interest specified in such Bonds;

second: to the payment to the Persons entitled thereto of the unpaid principal of any Bonds that shall have become due and payable (other than Bonds deemed to have been paid under the Indenture as described above” under the heading “Discharge of Lien”), in the order of their due dates, and, if the amount available shall not be sufficient to pay in full the principal of Bonds due and payable on any particular date, then to the payment ratably according to the amount of such principal due on such date, to the Persons entitled thereto without any discrimination or preference;

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third: to the payment of the interest on and the principal of Bonds, to the purchase and retirement of Bonds, and to the redemption of Bonds, all in accordance with the Indenture; and

fourth: to the payment of any amounts owing to each Bond Insurer to the extent not paid pursuant to first, second and third above.

(b) if the principal of all Bonds shall have become, or shall have been declared, due and payable, all such money will be applied to the payment of principal and interest then due on the Bonds, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or preference; and

(c) if the principal of all Bonds shall have been declared due and payable and if such declaration thereafter shall have been rescinded and annulled as described above under the heading “Acceleration of Maturities,” then, subject to the provisions of the Indenture described in (b) above, if the principal of all Bonds shall later become due and payable or shall be declared due and payable, the money then remaining in and thereafter accruing to the Bond Fund will be applied in accordance with the provisions of the Indenture described in (a) above.

Effect of Discontinuance of Proceedings (Section 1005)

If any proceeding taken by the Trustee or the Owners on account of any Event of Default shall have been discontinued or abandoned for any reason, then, and in every such case, the Authority, the Trustee, and the Owners will be restored to their former positions and rights under the Indenture and under the other Security Documents, respectively, and all rights, remedies, powers, and duties of the Trustee will continue as though no proceeding had been taken.

Control of Proceedings by a Majority of the Bondholders (Section 1006)

Anything else in the Indenture to the contrary notwithstanding, a Majority of the Bondholders will have the right, subject to the indemnification of the Trustee described below under the subheading “The Trustee- Indemnification of Trustee,” by an instrument or concurrent instruments in writing executed and delivered to the Trustee, (a) to direct the time, method, and place of conducting all remedial proceedings to be taken by the Trustee under the Indenture or under any other Security Document, whether before or after the occurrence of an Event of Default, if such direction is in accordance with law and the Indenture and (b) to approve any consent, approval, or waiver requested to be given by the Trustee under the Indenture.

Restrictions Upon Actions by Individual Owners (Section 1007)

Except as described below under the heading “Right to Enforce Payment of the Bonds Unimpaired,” no Owner will have any right to institute any suit, action, or proceeding in equity or at law on any Bond or for the execution of any trust under the Indenture or for any other remedy under the Indenture unless the Authority or the Requisite Number of Bondholders previously shall have given to the Trustee written notice of the Event of Default on account of which such suit, action, or proceeding is to be instituted, and unless also the Authority or the Owners shall have made a written request of the Trustee after the right to exercise such powers or right of action, as the case may be, shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers hereinabove described or to institute such action, suit, or proceedings in its or their name, and unless, also, there shall have been furnished to the Trustee reasonable security and indemnity against the costs, expenses, and liabilities to be incurred therein or thereby, and the Trustee shall have refused or neglected to comply with such request within a reasonable time. Such notification, request, and furnishing of indemnity will, in every such case, at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of the Indenture or to any other remedy thereunder. Notwithstanding the foregoing, and without complying therewith, the Requisite Number of Bondholders will be permitted to institute any such suit, action, or proceeding in their own names for the benefit of all Owners under the Indenture. It will be understood and intended by the Authority and the Trustee that, except as otherwise above described, no one or more Owners will have any right in any manner whatsoever by his, her, its, or their action to affect, disturb, or prejudice the security of the Indenture, or to enforce

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any right thereunder except in the manner provided in the Indenture and described herein, that all proceedings at law or in equity will be required to be instituted, had, and maintained in the manner provided in the Indenture and described herein and for the benefit of all Owners and that any individual rights of action or other right given to one or more of such Owners by law will be restricted by the Indenture to the rights and remedies therein provided.

Appointment of Receiver (Section 1008)

On the occurrence of an Event of Default and on the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Owners under the Indenture, the Trustee will be entitled, as a matter of right, to the appointment of a receiver or receivers of the amounts payable under the Loan Agreement and the Notes as assigned to the Trustee under the Indenture, pending such proceedings, with such powers as the court making such appointments shall confer, whether or not any such amounts shall be sufficient ultimately to satisfy the Bonds then Outstanding.

Enforcement of Rights of Action (Section 1009)

All rights of action (including the right to file proof of claim) under the Indenture or under any Bonds will be permitted to be enforced by the Trustee without the possession of any Bonds or the production thereof in any proceedings relating thereto, and any such suit or proceedings instituted by the Trustee will be required to be brought by the Trustee in its name as Trustee, without the necessity of joining as plaintiffs or defendants any Owners secured by the Indenture, and any recovery of judgment will be for the equal benefit of the Owners.

No Remedy Exclusive (Section 1010)

No remedy conferred on or reserved to the Trustee or the Owners is exclusive of any other remedy or remedies therein provided, and each and every such remedy shall be cumulative and in addition to every other remedy given thereunder or now or hereafter existing at law or in equity.

Waivers (Section 1011)

No delay or omission by the Trustee or any Owner in the exercise of any right or power accruing on any Event of Default will impair any such right or power or be construed to be a waiver of any Event of Default or any acquiescence therein, and every power or remedy given by the Indenture to the Trustee and the Owners will be permitted to be exercised from time to time and as often as may be deemed expedient.

The Trustee (Article XI)

Duties of the Trustee. The Trustee, prior to the occurrence of an Event of Default and after the waiving or curing of all Events of Default that may have occurred, will undertake to perform such duties and only such duties as are specifically set forth in the Indenture and in the other Bond Documents. In case an Event of Default of which the Trustee shall have been notified or of which it is deemed to have notice as described below under the subheading “Trustee Deemed to Have Notice of Certain Events of Default” shall have occurred (that shall not have been cured or waived), the Trustee will be required to exercise such of the rights and powers vested in it by the Indenture and by the other Bond Documents, and to use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. (Section 1101)

Right of Trustee to Perform Duties through Others. The Trustee will be permitted to execute any of the trusts or powers under the Indenture and of the other Bond Documents and perform any of its duties by or through attorneys, accountants, agents, receivers, or employees, will not be responsible for the acts of any attorneys, accountants, agents, or receivers appointed by it in good faith and without negligence, will be entitled to advice of counsel concerning all matters of trusts of the Indenture and of the other Bond Documents and the duties thereunder, and will be permitted in all cases to pay such reasonable compensation, subject to reimbursement, to all such attorneys, accountants, agents, receivers, and employees as may be reasonably employed in connection with the trusts of the Indenture. As to matters of law, the Trustee may act upon the opinion or advice of any attorneys (who may be the attorney or attorneys for the Authority or the Borrower) approved by the Trustee in the exercise of

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reasonable care. The Trustee will not be responsible for any loss or damage resulting from any action or non-action taken in good faith in reliance upon such opinion or advice. (Section 1101)

Reliance on Notices. Requests, etc. The Trustee will be permitted to rely upon and will be protected in acting in good faith upon any notice, request, resolution, consent, certificate, order, affidavit, letter, telegram, facsimile transmission, electronic mail, or other paper or electronic document or any oral communication or direction reasonably believed to be genuine and correct and to have been signed or sent or given by the proper Person or Persons in accordance with the provisions of any of the Bond Documents. As to the existence or non- existence of any fact or as to the sufficiency or validity of any instrument, paper, or proceedings, the Trustee will be entitled to rely upon a certificate signed on behalf of the Authority by the Authorized Authority Representative or by an Assistant Secretary and upon a certificate signed on behalf of the Borrower by the Authorized Borrower Representative or by the President or the Chairman of the Board of Directors of the Beyond Owners Group and attested by the Secretary of the Beyond Owners Group as sufficient evidence of the facts therein contained. Prior to the occurrence of an Event of Default of which the Trustee shall have been notified or of which it shall be deemed to have notice as described below under the subheading “Trustee Deemed to Have Notice of Certain Events of Default,” the Trustee will also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction, or action is necessary or expedient, but will be permitted, at its discretion, to secure such further evidence deemed necessary or advisable, but will in no case be bound to secure the same. (Section 1101)

Trustee Deemed to Have Notice of Certain Events of Default. The Trustee will not be required to take notice or be deemed to have notice of any failure on the part of the Authority to comply with the terms of the Indenture or any other Authority Document or the Borrower to comply with the terms of the Loan Agreement or any other Borrower Document except (a) failure by the Authority to cause to be made any of the payments to the Trustee required to be made by the provisions of the Indenture described above under the headings “Revenue Fund,” “Bond. Fund,” “Redemption Fund,” “Issuance Cost Fund,” “Construction Fund,” “Debt Service Reserve Fund,” “Repair and Replacement Fund,” “Insurance and Condemnation Funds,” “Operations Contingency Fund,” “Surplus Fund,” and “Rebate Fund” and (b) failure by the Borrower to make any of the Loan Payments to the Trustee, unless the Trustee shall be specifically notified in writing of such failure by the Authority or by the Requisite Number of Bondholders. Notwithstanding any other provision of the Indenture, no right of the Trustee to indemnification will relieve the Trustee from responsibility for making Debt Service Payments on the Bonds when due from money available to it or accelerating the Bonds as required by the Indenture. (Section 1101)

Trustee’s Fees and Expenses. The Trustee will be entitled to payment and/or reimbursement for reasonable fees for Ordinary Services of the Trustee rendered under the Indenture, and all advances, reasonable attorneys’ fees with proper substantiation, and other Ordinary Expenses of the Trustee reasonably made or incurred by the Trustee in connection with such Ordinary Services of the Trustee, and in the event that the Trustee shall perform Extraordinary Services of the Trustee, it will be entitled to reasonable extra compensation therefor and to reimbursement for reasonable Extraordinary Expenses of the Trustee in connection therewith; provided, that if such Extraordinary Services of the Trustee or Extraordinary Expenses of the Trustee shall be the result of the negligence or willful misconduct of the Trustee, it will not be entitled to compensation or reimbursement therefor. The Trustee will be entitled to payment and reimbursement for the reasonable fees and charges of the Trustee as bond registrar and paying agent for the Bonds as hereinabove described. Notwithstanding any other provision of the Indenture or the Loan Agreement to the contrary, at all times while any Bonds are Outstanding, payments to the Trustee for services under the Indenture will be superior to the payment of Debt Service Payments on the Bonds, and the Trustee will have a first and prior lien on the Trust Estate for payment of its fees and expenses. (Section 1102)

Notice if Payment Default Occurs. If a failure to comply shall occur of which the Trustee shall be required to take notice or if notice of a failure to comply shall be given to the Trustee as provided in the provisions of the Indenture described under the subheading “Notice of Default’ above, the Trustee will be required to give written notice thereof to the Authority as is specified in the Indenture and will be required to give written notice thereof by first-class mail, within fifteen (15) days (unless such failure shall be cured or waived), to all Bondholders, provided that, except in the case of a failure to make due and punctual payment of the Debt Service Payments on the Bonds, the Trustee may withhold such notice to the Bondholders if and so long as the board of directors, the executive

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committee, or a trust committee of directors or Responsible Officers of the Trustee in good faith shall determine that the withholding of such notice is in the interests of the Bondholders. (Section 1103)

Resignation by the Trustee. The Trustee and any successor Trustee will be permitted at any time to resign from the trusts created by the Indenture by giving thirty (30) days’ written notice to the Authority, to each Bond Insurer, to the Borrower, to each Rating Agency, and, by first-class (postage prepaid) mail, to each Bondholder, and such resignation will take effect at the appointment of a successor Trustee pursuant to the provisions of the Indenture and acceptance by the successor Trustee of such trusts. If no successor Trustee shall have been so appointed by the Authorized Borrower Representative or the Bondholders pursuant to the Indenture within thirty (30) days after delivery of such notices, a temporary Trustee will be permitted to be appointed by the Authority pursuant to the Indenture. In the event that no successor Trustee shall have been appointed and shall have accepted appointment within thirty (30) days of the giving of written notice by the resigning Trustee as aforesaid, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (Section 1106)

Removal of the Trustee. The Trustee will be permitted to be removed at any time upon thirty (30) days’ written notice (a) by the Authority for any breach of the trusts set forth in the Indenture or any failure or refusal to act as Trustee, (b) by an instrument or concurrent instruments in writing delivered to the Trustee and to the Authority and signed by a Majority of the Bondholders, or (c) by an instrument in writing delivered to the Trustee and to the Authority signed by the Authorized Borrower Representative, provided no Event of Default under the Indenture or the Loan Agreement shall have occurred and be continuing. Removal of the Trustee will not be effective until a successor or temporary Trustee shall have been appointed pursuant to the provisions of the Indenture described under the immediately succeeding subheading “Appointment of Successor Trustee; Temporary Trustee” and the Trustee shall have been paid for all Ordinary Services and Extraordinary Services of the Trustee rendered under the Indenture and for all Ordinary Expenses and Extraordinary Expenses of the Trustee incurred under the Indenture. The Authority, or the Borrower on behalf of the Authority, will be required to give written notice of removal of the Trustee in accordance with the provisions of the Indenture described in this paragraph to each Rating Agency. (Section 1107)

Appointment of Successor Trustee; Temporary Trustee. In case the Trustee shall (a) resign or be removed or (b) be dissolved or shall be in the course of dissolution or liquidation, or in case it shall be taken under the control of any public officer or officers or of a receiver appointed by a court or otherwise become incapable of acting under the Indenture, a successor may be appointed by an instrument executed and signed by an Authorized Signatory under seal and executed by the Authorized Borrower Representative; provided, that if a successor Trustee shall not be so appointed within ten (10) days after notice of resignation shall have been mailed or an instrument of removal shall have been delivered as required by the provisions of the Indenture described in the preceding paragraph or within ten (10) days of the Authority’s knowledge of any of the events specified in (b) hereinabove, then a Majority of the Bondholders, by an instrument or concurrent instruments in writing signed by or on behalf of such Owners, delivered personally or sent by certified or registered mail to the Authority and the Borrower, may designate a successor Trustee. Until a successor Trustee shall be appointed by the Bondholders in the manner described above, the Authority, by resolution and upon written notice to the Borrower, will be required to appoint a temporary Trustee to fill such vacancy, and any such temporary Trustee so appointed by the Authority will immediately and without further act be superseded by the successor Trustee so appointed by the Bondholders. Notice of the appointment of a successor Trustee will be required to be given in the same manner as with respect to the resignation of the Trustee. Every such successor Trustee will be required to be a trust company or bank organized under the laws of the United States of America or any state thereof that is in good standing within or outside the State of Wisconsin; be eligible to serve as trustee, bond registrar, and paying agent under applicable law; be duly authorized to exercise trust powers and subject to examination by federal or state authority; have a reported combined capital, surplus, and undivided profits of not less than Seventy-Five Million Dollars ($75,000,000); and be an institution willing, qualified, and able to accept the trusteeship upon the terms and conditions of the Indenture.

In case at any time the Trustee shall resign and no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of the Indenture prior to the date specified in the notice of resignation as the date when such resignation shall take effect, the Owner of any Bond or the resigning Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor Trustee. (Section 1108)

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Indemnification of Trustee. Before taking any action under the Indenture at the direction or request of the Bondholders, the Trustee may require that a reasonably satisfactory indemnity bond be furnished for reimbursement of all reasonable expenses it may incur and to protect it against all liabilities, except for liability that is adjudicated to have resulted from the gross negligence or willful misconduct of the Trustee by reason of any action so taken. (Section 1114)

Financial Statements. Upon the written request of any Owner, the Trustee, at the expense of such Owner, will be required under the terms of the Indenture to deliver to such Owner a copy of any of the financial statements of the Borrower that are described herein under the headings “The Loan Agreement - Financial Statements.” (Section 1116)

Amendment of the Indenture (Article XII)

Amendments to Indenture and Supplemental Indentures Not Requiring Consent of the Bondholders. (a) The Authority and the Trustee will be permitted, without the consent of or notice to any of the Bondholders, to enter into an amendment to the Indenture or an indenture supplemental to the Indenture for any one or more of the following purposes:

(i) to cure any error, ambiguity, or formal defect or omission in, or to correct or supplement any defective provision of, the Indenture,

(ii) to add to the covenants and agreements of, and the limitations and restrictions upon, the Authority in the Indenture other covenants, agreements, limitations, and/or restrictions to be observed by the Authority for the protection of the Bondholders or to surrender or limit any right or power herein reserved or conferred upon the Authority,

(iii) to evidence the appointment of a separate trustee or a co-trustee, or the succession of a new Trustee or the appointment of a new or additional paying agent or bond registrar,

(iv) to grant to or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers, benefits, security, liabilities, duties, or authority that may lawfully be granted to or conferred or imposed upon the Bondholders or the Trustee or either of them,

(v) to subject to the lien and security interest of the Indenture or any of the other Security Documents additional revenues, properties, or collateral,

(vi) to modify, amend, or supplement the Indenture or any indenture supplemental thereto in such manner as to permit the qualification thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect or to permit the qualification of any Bonds for sale under the securities laws of any state, and, if they so determine, to add to the Indenture or any indenture supplemental thereto such other terms, conditions, and provisions as may be permitted by the Trust Indenture Act of 1939, as amended, or any similar federal statute,

(vii) to modify, amend, or supplement the Indenture in such manner as to assure the continued exclusion of the interest on any Tax-Exempt Bonds from the gross income of the Owners thereof for federal income tax purposes,

(viii) to modify, amend, or supplement the Indenture in such a manner as shall be necessary in connection with the appointment of a successor Securities Depository under the Indenture,

(ix) to modify, amend, or supplement the Indenture for the purpose of obtaining or retaining a rating on the Bonds or a Series or Subseries of Bonds from a Rating Agency,

(x) to comply with any provisions of the Securities Act, the Exchange Act, or any rules or regulations promulgated thereunder,

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(xi) to reflect a revision to the Repair and Replacement Requirement set forth in an Exhibit attached to the Indenture in accordance with the provisions of the Loan Agreement relating thereto,

(xii) to reflect a change in applicable law provided that the Trustee shall determine that such amendment or supplemental indenture does not materially adversely affect the Bondholders and each Bond Insurer, or

(xiii) to make any other change therein that, in the judgment of the Trustee, does not prejudice the Trustee or materially adversely affect the Bondholders and each Bond Insurer.

(b) The Authority and the Trustee will be required, without the consent of or notice to any of the Bondholders, to enter into an amendment to the Indenture or an indenture supplemental to the Indenture (i) in connection with the issuance of any Additional Bonds in accordance with the Indenture and the inclusion of additional Security in connection therewith, (ii) to the extent necessary with respect to the land and interests in land, buildings, furnishings, machinery, equipment, and all other real and personal property that may form a part of the Project, so as to identify the same more precisely or to substitute or add additional land or interests in land, buildings, furnishings, machinery, equipment, or real or personal property as Security, or (iii) with respect to any changes required to be made in the description of the Security in order to conform with similar changes made in the Loan Agreement. (Section 1201)

Amendments to Indenture and Supplemental Indentures Requiring Consent of the Bondholders. (a) Exclusive of amendments and indentures supplemental to the Indenture described above under the subheading “Amendments to Indenture and Supplemental Indentures Not Requiring Consent of the Bondholders,” and subject to the terms contained herein, a Super-Majority of the Bondholders will have the right, from time to time, anything contained in the Indenture to the contrary notwithstanding, to consent to and approve the execution by the Authority and the Trustee of an amendment to the Indenture or such indenture supplemental thereto as shall be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to, or rescinding, in any particular, any of the terms or provisions contained in the Indenture, in any amendment to the Indenture, or in any supplemental indenture; provided, however, that nothing contained in the Indenture will permit, or be construed as permitting: (i) an extension of the stated maturity or reduction in the principal amount of, or a reduction in the rate (other than a change in a variable rate as provided in the Indenture) or an extension of the time of payment of interest on, or a reduction of any premium payable on the redemption of, any Bonds, without the consent of the Owners of all of such Bonds, or (ii) the creation of any lien or security interest (other than any Permitted. Encumbrances) prior to or on a parity with the lien and security interests of the Indenture without the consent of the Owners of all of the Bonds at the time Outstanding that would be affected by the action to be taken, or (iii) a reduction in the amount, or an extension of the time of any payment, required by the mandatory sinking fund redemption provisions of the Indenture, without the consent of the Owners of all of the Bonds at the time Outstanding that would be affected by the action to be taken, or (iv) a reduction in the aforesaid aggregate principal amount of Bonds the Owners of which are required to consent to any such amendment or supplemental indenture, without the consent of the Owners of all of the Bonds at the time Outstanding, or (v) the modification of the trusts, powers, obligations, remedies, privileges, rights, duties, or immunities of the Trustee, without the written consent of the Trustee, or (vi) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, without the consent of the Owners of all of the Bonds at the time Outstanding, or (vii) the release of or requirements for the release of the Indenture, without the consent of the Owners of all of the Bonds at the time Outstanding.

(b) Anything in the Indenture to the contrary notwithstanding, if the Borrower shall not be in default under the Loan Agreement at such time, an amendment to the Indenture or supplemental indenture that affects any rights or obligations of the Borrower or that changes the priority or use of moneys under the Indenture will not become effective unless and until the Borrower shall have consented to the execution and delivery of such amendment or supplemental indenture. (Section 1202)

(c) No amendment hereto or supplemental indenture under this heading that adversely affects the rights and interests of a Bond Insurer shall become effective without the prior written consent of such Bond Insurer, so long as no Bond Insurer Default exists with respect to such Bond Insurer. Except as otherwise provided, none of the amendments or supplemental indentures relating to the purposes enumerated under the subheading

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“Amendments to Indenture and Supplemental Indentures Not Requiring Consent of the Bondholders” in and of themselves will adversely affect the rights and interests of a Bond Insurer hereunder.

Notice to Rating Agencies. The Trustee will, prior to execution, give written notice of, and after execution, copies of any amendment to the Indenture or to any indenture supplemental to the Indenture to each Rating Agency. (Section 1203)

Amendments to Other Bond Documents (Article XII1)

Amendments to Other Bond Documents Not Requiring Consent of the Bondholders. The Authority and the Trustee will be required, without the consent of or notice to the Bondholders, to consent to any amendment, change, or modification of the Bond Documents other than the Indenture for any one or more of the following purposes: (a) as may be required by the provisions of the Loan Agreement or the Indenture, (b) to provide for the issuance of Additional Bonds, (c) to cure any error, ambiguity, or formal defect or omission therein, or to correct or supplement any defective provision thereof, (d) to add to the covenants and agreements of, and the limitations and restrictions upon, the Borrower therein other covenants, agreements, limitations, and/or restrictions to be observed by the Borrower for the protection of the Bondholders or to surrender or limit any right or power herein reserved or conferred upon the Borrower, (e) in connection with the land and interests in land, buildings, machinery, equipment, and other real or personal property described in the Loan Agreement, the Leasehold Deed of Trust, and/or the Security Agreement so as to identify more precisely the same or to substitute or add additional land or interests in land, buildings, machinery, equipment, or other real or personal property, (f) to reflect a change in applicable law provided that the Trustee shall determine that such amendment, change, or modification does not materially adversely affect the Bondholders and each Bond Insurer, (g) to amend, change, or modify such Bond Documents in such manner as to assure the continued exclusion of the interest on any Tax-Exempt Bonds from the gross income of the Owners thereof for federal income tax purposes, (h) to modify, amend, or change such Bond Documents in such a manner as shall be necessary in connection with the appointment of a successor Securities Depository under the Indenture, (i) to modify, amend, or change such Bond Documents for the purpose of obtaining or retaining a rating on the Bonds or a Series or Subseries of Bonds from a Rating Agency, (j) to substitute a new “Borrower” under the Loan Agreement as provided therein, (k) to comply with any provisions of the Securities Act, the Exchange Act, or any rules or regulations promulgated thereunder, or (1) to make any other change therein that, in the judgment of the Trustee, does not prejudice the Trustee or materially adversely affect the Bondholders and each Bond Insurer. (Section 1301)

Amendments to Other Bond Documents Requiring Consent of the Bondholders. Except for the amendments, changes, or modifications described under the subheading “Amendments to Other Bond Documents Not Requiring Consent of the Bondholders” above, neither the Authority nor the Trustee may consent to any other amendment, change, or modification of the Bond Documents or any of them other than the Indenture without giving notice to and obtaining the written approval or consent of a Super-Majority of the Bondholders; provided, however, that nothing in the Indenture will permit or be construed as permitting (a) an extension of the time for payment of any amounts payable under the Loan Agreement or a reduction in the amount of any payment or in the total amount due under the Loan Agreement, without the consent of the Owners of all of the Bonds at the time Outstanding or (b) a reduction in the aforesaid aggregate principal amount of Bonds the Owners of which are required to consent to any such amendment, change, or modification of such other Bond Documents, without the consent of the Owners of all of the Bonds at the time Outstanding.

Notwithstanding anything described in the immediately preceding paragraph, no consent of any Bondholder or the Trustee shall be required (i) in connection with any amendment or modification of the Tax Agreement as shall be necessary, in the opinion of Bond Counsel, to preserve the exclusion of interest on any Tax Exempt Bonds from the gross income of the Owners thereof for federal income tax purposes, (ii) in connection with any amendment or modification of the Development Agreement or the Construction Agreement if such amendment or modification shall not affect the obligation of the Developer or the General Contractor to pay liquidated damages thereunder (including, without limitation, a delay of the commencement date or a decrease in the amount thereof) or (iii) in connection with any amendment or modification of the Development Agreement or the General Contractor that either shall not increase the Cost of the Project or, to the extent that the Cost of the Project shall be increased by such modification or amendment, the Authorized Developer Representative shall have certified in writing to the

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Trustee that such increase is not in excess of the amount deposited into the Construction Fund in connection with such amendment or modification. (Section 1302)

No amendment or supplement to the Bond Documents under this heading that adversely affects the rights and interests of a Bond Insurer shall become effective without-the prior written consent of such Bond Insurer, so long as no Bond Insurer Default exists with respect to such Bond Insurer. Except as otherwise provided, none of the amendments or supplemental indentures relating to the purposes enumerated under the subheading “Amendments to Other Bond Documents Not Requiring Consent of the Bondholders” in and of themselves will adversely affect the rights and interests of a Bond Insurer hereunder.

Notice to Rating Agencies. The Trustee will, prior to execution, give written notice of, and after execution, copies of any amendment, change, or modification of the Bond Documents other than the Indenture to each Rating Agency. (Section 1303)

Each Bond Insurer as Third-Party Beneficiary. Each Bond Insurer is a third-party beneficiary of the Indenture. (Section 1421)

Rights of the Series 2019 Bond Insurer. Anything contained in the Indenture to the contrary notwithstanding, the existence of all rights given to the Series 2019 Bond Insurer hereunder with respect to the giving of consents or approvals or to the direction of proceedings are expressly conditioned upon its timely and full performance of the Series 2019 Bond Insurance Policy. Any such rights will not apply if at any time there are no Insured Series 2019 Bonds Outstanding or a Series 2019 Bond Insurer Default exists; provided, that this Section shall not in any way limit or affect the rights of the Series 2019 Bond Insurer as an Owner of Insured Series 2019 Bonds, as subrogee of an Owner of Insured Series 2019 Bonds or as assignee of an Owner of Insured Series 2019 Bonds or to otherwise be reimbursed and indemnified for its reasonable costs and expenses and other payment on or in connection with the Insured Series 2019 Bonds, the Series 2019 Bond Insurance Policy or the Series 2019A Reserve Policy either by operation of law or at equity or by contract.

The rights granted to the Series 2019 Bond Insurer under the Indenture and the Bond Documents to request, consent to or direct any action are rights granted to the Series 2019 Bond Insurer in consideration of its issuance of the Series 2019 Bond Insurance Policy. Any exercise by the Series 2019 Bond Insurer of such rights is merely an exercise of the Series 2019 Bond Insurer’s contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence any position of the Series 2019 Bond Insurer, positive or negative, as to whether Bondholder consent is required in addition to consent of the Series 2019 Bond Insurer.

In determining whether any amendment, consent or other action to be taken, or any failure to act, under the Indenture would adversely affect the security for the Bonds or the rights of the Bondholders, the Trustee shall consider the effect of any such amendment, consent, action or inaction as if there were no Series 2019 Bond Insurance Policy. (Section 1422)

THE LOAN AGREEMENT

Introduction

The Loan Agreement is an agreement that will provide for the loan of the proceeds of the Series 2019 Bonds by the Authority to the Borrower and for the repayment of and security for such loan by the Borrower.

Term of the Loan Agreement (Section 5.01)

The Loan Agreement will become effective upon its execution and delivery and will be in full force and effect until all obligations under the Indenture shall have been paid in full (or provision for such payment shall have been made in accordance with the Indenture); provided, however, that the covenants and obligations expressed in the Loan Agreement to so survive will survive the termination of the Loan Agreement.

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Acquisition, Construction, Furnishing, and Equipping of the Series 2019 Project (Section 4.02)

The Borrower will be required to construct the Series 2019 Project in accordance with the Plans and Specifications and the Construction Contracts, subject to the terms and conditions of the Ground Lease, and to warrant that the construction of the Series 2019 Project in accordance with the Plans and Specifications and the Construction Contracts will result in Building 100 being a facility suitable for use by the Borrower as a student housing facility and related facilities and that all real and personal property provided for therein is necessary or appropriate in connection with the Series 2019 Project. The Borrower will be permitted to make changes in or additions to the Plans and Specifications for the Series 2019 Project; provided, however, changes in or additions to such Plans and Specifications that are material will be subject to the prior written approval of the Ground Lessor as and to the extent required by the Ground Lease.

Loan Payments and Other Amounts Payable (Section 5.02)

(a) Basic Loan Payments: Until the Debt Service Payments on the Bonds are paid in full or provision for the payment thereof shall have been made in accordance with the Indenture, the Borrower will be required to pay to the Trustee for the account of the Authority as Basic Loan Payments, in each case for deposit into the Bond Fund, amounts sufficient to pay the Debt Service Payments on the Bonds as and when the same shall become due and all other sums payable under the terms of the Bonds. The Borrower will be required to pay to the Trustee for the account of the Authority:

(i) on or before February 20, 2019, and on or before the 20th day of each month thereafter, a sum equal to 1/5th of the amount payable on July 1, 2019 as interest on the Series 2019 Bonds, or such lesser amount that, together with amounts already on deposit in the Bond Fund and available therefor, is sufficient to pay interest on the Series 2019 Bonds to become due on July 1, 2019, as provided in the Indenture;

(ii) on or before July 20, 2019, and on or before the 20th day of each month thereafter, a sum equal to 1/6th of the amount payable on the immediately succeeding Interest Payment Date as interest on the Series 2019 Bonds, or such lesser amount that, together with amounts already on deposit in the Bond Fund and available therefor, is sufficient to pay interest on the Series 2019 Bonds to become due on the immediately succeeding Interest Payment Date, as provided in the Indenture;

(iv) on or before July 20, 2021, and on or before the 20th day of each month thereafter, to and including before June 20, 2058, a sum equal to the sum of (i) 1/12th of the principal due on the immediately succeeding July 1 that is a maturity date of the Series 2019 Bonds and (ii) 1/12th of the Mandatory Sinking Fund Redemption Requirement;

(vi) on the Business Day immediately preceding any date on which the Series 2019 Bonds are to be redeemed pursuant to the mandatory redemption provisions of the Indenture (other than mandatory sinking fund redemption), an amount equal to the Redemption Price of the Series 2019 Bonds to be redeemed (taking into account amounts then on deposit in the Bond Fund and the Redemption Fund to be used for the payment of such Series 2019 Bonds to be redeemed); and

(vii) on the Business Day immediately preceding any date on which any Additional Bonds to be redeemed pursuant to any mandatory redemption provisions of any supplemental indenture or indentures executed in

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connection with the issuance of Additional Bonds (other than mandatory sinking fund or other similar redemption pursuant to such supplemental indenture or indentures), an amount equal to the Redemption Price of such Additional Bonds to be redeemed (taking into account amounts then on deposit in the Bond Fund and the Redemption Fund to be used for the payment of such Additional Bonds to be redeemed).

Each payment of Basic Loan Payments under clauses (a)(i), (ii) and (iii) above will be required in all events to be sufficient, after giving credit for funds held in the Bond Fund (including amounts held in the Capitalized Interest Account and the Revenue Fund available for such purpose), to pay the total amount of interest payable on the Bonds on the immediately succeeding Interest Payment Date, each payment of Basic Loan Payments under clauses (a)(iv), (v) and (vi) above will be required in all events to be sufficient, after giving credit for funds held in the Bond Fund available for such purpose, to pay the total amount of principal payable in respect of the Bonds on the immediately succeeding July 1, and each payment of Basic Loan Payments under clauses (a)(vi) and (vii) above will be required in all events to be sufficient, after giving credit for funds held in the Redemption Fund available for such purpose, to pay the total Redemption Price of the Bonds on the applicable date of redemption. Any Basic Loan Payments will be reduced or need not be made to the extent that there is money on deposit in the Bond Fund and/or the Redemption Fund in excess of scheduled payments of Basic Loan Payments plus the amount required for the payment of Bonds theretofore matured or called for redemption, the amount required for the payment of interest for which checks or drafts have been mailed by the Trustee, and past due interest in all cases where Bonds have not been presented for payment. Further, if the amount held by the Trustee in the Bond Fund and the Redemption Fund shall be sufficient to pay at the times required the Debt Service Payments on the Bonds then remaining unpaid, the Borrower will not be obligated to make any further payments of Basic Loan Payments under the above-described provisions. There will also be a credit against remaining Basic Loan Payments for Bonds purchased, redeemed, or canceled, as provided in the Indenture or in any supplemental indenture or indentures executed in connection with the issuance of Additional Bonds as provided therein.

(b) Additional Loan Payments: The Borrower will be required to pay (i) to the Trustee until the Debt Service Payments on the Bonds are paid in full (A) for deposit into the Rebate Fund any amount required to be deposited therein pursuant to the Loan Agreement, (B) promptly upon request, an amount equal to the annual fee of the Trustee for the Ordinary Services of the Trustee rendered, and the Ordinary Expenses of the Trustee incurred, under the Indenture, as and when the same shall become due, (C) promptly upon request, the reasonable fees and charges of the Trustee, as bond registrar and paying agent, and of any other paying agents on the Bonds for acting as paying agents as provided in the Indenture, as and when the same shall become due, and (D) promptly on request, the reasonable fees and charges of the Trustee for the Extraordinary Services of the Trustee rendered by it, and the Extraordinary Expenses of the Trustee incurred by it, under the Indenture, as and when the same shall become due; provided, that the Borrower may, without creating an Event of Default, contest in good faith the reasonableness of any such Extraordinary Services of the Trustee and Extraordinary Expenses of the Trustee and the reasonableness of any such fees, charges, or expenses, (E) for deposit into any Fund or Funds created under the Indenture or any supplemental indenture or indentures executed in connection with the issuance of Additional Bonds other than the Repair and Replacement Fund, the Operations Contingency Fund, and the Surplus Fund, any and all additional amounts required to be deposited into such Fund or Funds by any amendment or amendments to the Loan Agreement executed in connection with the issuance of Additional Bonds on the dates set forth therein, and (F) any and all amounts effect the redemption of any Bonds required to be redeemed pursuant to the provisions of the Indenture described in the Official Statement under the subheading “THE SERIES 2019 BONDS – Redemption – Other Redemptions at Par,” (ii) to the Authority, the Authority Additional Payments, (iii) to the Independent Engineer and the Insurance. Consultant all of their reasonable fees, charges, and expenses, (iv) to the Borrower, any unsubordinated management fees owed pursuant to the Management Agreement, which will be evidenced by a written invoice approved by the Borrower and the Ground Lessor; and (v) to each Bond Insurer, any reimbursement due to such Bond Insurer pursuant to the Loan Agreement.

Such Authority Additional Payments will be billed to the Borrower by the Authority or the Trustee from time to time, together with a statement certifying that the amount billed has been incurred or paid by such party for one or more of the above items. Amounts so billed will be paid by the Borrower within thirty (30) days after receipt of the bill by the Borrower.

In the event the Borrower shall fail to make any of the payments described required under this heading “Loan Payments and Other Amounts Payable,” the item or installment so in default will continue as an obligation

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of the Borrower until the amount in default shall have been paid in full and will bear interest at the highest rate of interest on the Bonds.

All amounts deposited in the Funds and Accounts created in the Indenture and available to be used to pay the amounts, fees, charges, and expenses described in the first paragraph under this subheading “Additional Loan Payments” in accordance with the terms of the Indenture will be credited against the Borrower’s obligation to make Additional Loan Payments to the extent such amounts are so used.

(c) Reserve Loan Payments: The Debt Service Reserve Fund will be funded in an amount equal to the Debt Service Reserve Requirement for the purpose of paying Debt Service Payments on the Series 2019 Bonds and on any Additional Bonds intended to be secured by the Debt Service Reserve Fund as the same become due in the event there are insufficient funds for said purpose in the Bond Fund, the Redemption Fund, the Surplus Fund (including the Restricted Account of the Surplus Fund) and the Operations Contingency Fund, unless provision for their payment in full is duly made, and for payment of the reasonable fees, charges, and expenses of the Trustee on the occurrence of an Event of Default under the Indenture. In the event any amounts from the Debt Service Reserve Fund are withdrawn or if there is a diminution in Value of the cash and investments held in the Debt Service Reserve Fund as of any Valuation Date or if any net losses result from the investment of amounts held in the Debt Service Reserve Fund that will reduce the Value of the cash and investments held in the Debt Service Reserve Fund to less than the Debt Service Reserve Requirement as of any Valuation Date, the Borrower will, beginning on the 20th day of the month following notice from the Trustee of such withdrawal, diminution in Value, or losses, and on the 20th day of each month thereafter, in addition to any other Loan Payments that may be due, make 12 consecutive monthly payments as Reserve Loan Payments to the Trustee for deposit into the Debt Service Reserve Fund, each equal to 1/12th of the amount of such withdrawal, diminution in Value, or losses, including any amounts owing to the Series 2019 Bond Insurer on account of a draw on the Series 2019 Reserve Policy, in all instances necessary to restore the Debt Service Reserve Fund to the Debt Service Reserve Requirement.

(d) Repair and Replacement Loan Payments: (i) Until the principal of, premium, if any, and interest on the Series 2019 Bonds have been fully paid, the Borrower agrees to pay to the Trustee, for deposit into the Repair and Replacement Fund, commencing on the twentieth day of the first full month following the Series 2019 Completion Date, and on the twentieth day of each month thereafter to and including June 20 of the partial Annual Period in which the Series 2019 Completion Date occurred, in equal monthly installments, a fraction, the denominator of which is 12, and the numerator of which is the number of full calendar months following the Series 2019 Completion Date through June 20 of such partial Annual Period, of the applicable Repair and Replacement Fund Requirement for Building 100 for the partial Annual Period specified in the Indenture, and on the twentieth day of each month thereafter in equal monthly installments of one twelfth (1/12th) of the applicable Repair and Replacement Fund Requirement for Building 100 for each Annual Period as specified in the Indenture. In addition, the Borrower agrees to pay to the Trustee amounts for deposit into the Repair and Replacement Fund as specified in any amendment to the Loan Agreement. The applicable Repair and Replacement Fund Requirement for Building 100 shall be subject to additional increases or decreases as is recommended in a report following each Periodic Project Assessment for Building 100, which assessments must be conducted at least once every five years following the Series 2019 Completion Date. The Repair and Replacement Fund Requirement for the Parking Facility shall be subject to additional increases or decreases as is recommended in a report following each Periodic Project Assessment for the Parking Facility, which assessments must be conducted at least once every five years following the Series 2019 Completion Date. In the event the Periodic Project Assessment requires an increase to the Repair and Replacement Fund Requirement to address capital repair requirements to the Parking Facility, the Borrower shall deliver the Repair and Replacement Fund Requirement relating to the Parking Facility to the Trustee for deposit to the Parking Facility Account within five days after receipt of such amounts from the University as Additional Rent under the Parking Facility Lease. The Periodic Project Assessment report for Building 100 and the Parking Facility will be promptly delivered to each Bond Insurer and the Trustee.

(ii) If any funds are withdrawn from the Repair and Replacement Fund to pay Debt Service Payments on the Bonds in accordance with the Indenture, the Borrower will, beginning on the 20th day of the month following any such withdrawal and continuing on the 20th day of each month thereafter, pay to the Trustee for deposit to the Repair and Replacement Fund the greater of (1) the lesser of (A) 1/12th of the amount of such withdrawal or (B) such amount that is necessary to reimburse the Repair and Replacement Fund for all such withdrawals, or (2) such amount as determined by the Borrower.

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(e) Credit for Transfers and Deposits Under the Indenture: The Borrower will receive a credit against its obligation to make the Loan Payments under the provisions of the Loan Agreement described under this heading to the extent of all sums that are transferred to any Person or deposited to any Fund or Account in accordance with the provisions of the Indenture described below under the headings “The Indenture - Revenue Fund,” “- Operations Contingency Fund,” and “- Surplus Fund.”

(f) Authority Closing Expenses. In addition to and without in any way limiting the Borrower’s obligations to pay and indemnify the Authority and the Authority Indemnified Persons against fees, costs, and charges arising out of or in connection with the Loan Agreement, the other Borrower Documents, the Bonds, or the Indenture, the Borrower will be required to pay, on the Closing Date, to the Authority or to the Authority’s attorneys, as applicable, the Authority Closing Expenses.

Payments Under the Series 2019 Notes (Section 3.01)

To evidence its obligation to make Basic Loan Payments, the Borrower will execute and deliver to the Authority the Series 2019 Notes pursuant to which the Borrower will be required to make payments sufficient to pay, when due, the Debt Service Payments on the Series 2019 Bonds. The Authority will endorse the Series 2019 Notes, without recourse, to the order of the Trustee.

Obligations of the Borrower Unconditional (Section 5.04)

The obligations of the Borrower to make the payments required pursuant to the Loan Agreement and to perform and observe any and all of the other covenants and agreements on its part contained in the Loan Agreement will be a general obligation of the Borrower and will be absolute and unconditional irrespective of any defense or any rights of setoff, recoupment, or counterclaim it may otherwise have against the Authority. The Borrower will agree that it will not (a) suspend, abate, reduce, abrogate, diminish, postpone, modify, or discontinue any payments described above under the heading “Loan Payments and Other Amounts Payable,” (b) fail to observe any of its other agreements contained in the Borrower Documents, or (c) except as described below under the headings “General Options to Terminate the Loan Agreement,” “Option to Prepay the Series 2019 Loan Upon the Occurrence of Certain Extraordinary Events,” and “Option to Prepay Loan in Connection with Optional Redemption of the Bonds” or in any amendment or amendments to the Loan Agreement executed in connection with the issuance of Additional Bonds, terminate its obligations under any of the Borrower Documents for any contingency, act of God, event, or cause whatsoever, including, without limiting the generality of the foregoing, failure of the Borrower to occupy or to use the Project as contemplated in the Loan Agreement or otherwise, arty change or delay in the time of availability of the Project, any acts or circumstances that may impair or preclude the use or possession of the Project, any defect in the title, design, operation, merchantability, fitness, or condition of the Project or in the suitability of the Project for the Borrower’s purposes or needs, failure of consideration, any declaration or finding that any of the Bonds are unenforceable or invalid, the invalidity of any provision of the Loan Agreement or any of the other Bond Documents, any acts or circumstances that may constitute an eviction or constructive eviction, destruction of or damage to the Project, the taking by eminent domain of title to or the use of all or any part of the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of Wisconsin or any political subdivision or agency of either or in the rules or regulations of any governmental authority, or any failure of the Authority to perform and observe any agreement, whether express or implied, or any duty, liability, or obligation arising out of or connected with the Loan Agreement. The rights of the Authority to enforce the obligations of the Borrower will be limited as described in the Official Statement under the heading “Non-Recourse Obligation of the Borrower.”

Nothing described in the immediately preceding paragraph will be construed to release the Authority from the performance of any of the agreements on its part contained in the Loan Agreement. In the event the Authority fails to perform any such agreement on its part, the Borrower will be permitted to institute such action against the Authority as the Borrower may deem necessary to compel performance so long as such action does not abrogate the Borrower’s obligations under the Loan Agreement.

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Facilities Condition Report; Repair and Replacement Fund Certification; Latent Defect Report (Section 5.05)

(a) At least every five years following the Completion Date for each Student Housing Facility, the Borrower will file with the Trustee and each Bond Insurer a certification accompanied by a written report following each Periodic Project Assessment for such Student Housing Facility and, for the Series 2019 Project, the Parking Facility. The Repair and Replacement Fund Requirement for the Student Housing Facilities and, if applicable, Parking Facility Repair and Replacement Fund Requirement for the Parking Facility, will be subject to adjustment upward or downward if so recommended in the Periodic Project Assessment report, and if so adjusted, the Borrower will provide the Authority, each Bond Insurer and the Trustee with a revised Exhibit to the Indenture which revised Exhibit will, from and after the date of such recommendation, be deemed and treated as a supplement to the Indenture.

(b) If any latent and inherent defective items determined to have been present in the design and construction of each Student Housing Facility are identified in the Latent Defect Report prepared in connection with the initial Periodic Project Assessment with each Student Housing Facility, the Borrower will, in a prompt and timely manner, prepare and deliver an appropriate form of “Latent Defects Notice” to the Developer and the. General Contractor notifying them of such latent and inherent defective items and requesting that they take steps to effectively and immediately remedy such items (and in advance of the expiry of the fifth anniversary of the Completion Date for each Student Housing Facility) to allow complete fulfillment of their contractual obligations with respect to the design and construction of such Student Housing Facility.

Maintenance and Modification of Project by the Borrower; Additions or Alterations (Section 6.01)

The Borrower will be required during the Agreement Term at its own expense to (a) keep the Project in as reasonably safe condition as its operations shall permit, (b) keep the Buildings and all other improvements forming a part of the Project in good repair and in good operating condition, making from time to time, subject to the requirements described below under the heading “Removal of Equipment,” all necessary and proper repairs thereto and renewals and replacements thereof; including external and structural repairs, renewals, and replacements, and (c) use the Equipment in the regular course of its business only, within the normal capacity of the Equipment, without abuse, and in a manner contemplated by the manufacturer thereof, and cause the Equipment to be maintained in accordance with the manufacturer’s then currently published standard maintenance contract and recommendations. The Borrower will be permitted, also at its own expense, from time to time to make any Additions or Alterations to the Project that it may deem desirable for its business purposes and that do not, in the opinion of an Independent Engineer filed with the Trustee and Series 2019 Bond Insurer, adversely affect the operation or value of the Project, provided, that the opinion of an Independent Engineer will only be required in the case any Addition or Alteration or contract having a cost of more than One Hundred Thousand Dollars ($100,000). Additions or Alterations to the Project so made by the Borrower will be required to be on the Property, to become a part of the Project, and to become subject to the lien and security interest of the Leasehold Deed of Trust and the Security Agreement. Such Additions or Alterations that cost in excess of Five Hundred Thousand Dollars ($500,000) will be required to be made only by contractors that furnish performance and labor and material payment bonds in the full amount of such contracts, made by the contractor thereunder as the principal and a surety company or companies reasonably acceptable to the Trustee and Series 2019 Bond Insurer, as surety, and such bonds will be required to be in such forms as are reasonably acceptable to the Trustee and Series 2019 Bond Insurer. Such bonds will be required to name the Borrower, the Authority, and the Trustee as obligees, and all Net Proceeds received under such bonds will be required to be paid over to the Trustee and deposited into the Insurance Fund to be applied to the completion of the Additions or Alterations to the Project.

The Borrower will execute a conditional assignment directing the architect who has prepared any Plans and Specifications for any “material” Additions or Alterations to make available to the Trustee a complete set of the Plans and Specifications, which assignment will be effective only on the occurrence of an Event of Default. All Construction Contracts executed by the Borrower for construction of any “material” Additions or Alterations will contain a provision that, or by separate agreement such contractors will agree that, on the occurrence of an Event of Default, said contracts with the contractors and/or sub-contractors will be deemed assigned to the Trustee should the Trustee so direct. The Borrower covenants to include such conditional assignments in all material contracts and subcontracts executed for work to be performed on the Property. For purposes of this Section, the term “material”

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means any Addition or Alteration or contract having a cost of more than One Hundred Thousand Dollars ($100,000).

The Borrower will further agree that at all times during the construction of Additions or Alterations that cost in excess of Five Hundred Thousand Dollars ($500,000), it will maintain or cause to be maintained in full force and effect builder’s risk - completed value form insurance to the full insurable value of such Additions or Alterations. The Borrower will not be permitted to permit any mechanics’ or materialmen’s or other statutory liens to be perfected or remain against the Project for labor or materials furnished in connection with any Additions or Alterations so made by it, provided that it will not constitute an Event of Default upon such lien’s being filed if the Borrower shall promptly notify the Trustee of any such liens and the Borrower shall in good faith promptly contest such liens; in such event, the Borrower will be permitted to permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom provided the Borrower shall furnish the Trustee with a bond or cash deposit equal to at least the amount so contested, which, in the case of cash, will be required to be placed into an account with the Trustee, or with an Opinion of Counsel stating that by nonpayment of any such items, the lien and security interest of the Leasehold Deed of Trust and the Security Agreement will not be materially endangered and neither the Project nor any material part thereof will be subject to imminent loss or forfeiture. The proceeds of the bond or cash deposit may be used by the Trustee to satisfy the lien if action is taken to enforce the lien and such action is not stayed. The bond or cash deposit will be returned to the Borrower if the lien shall be successfully contested. If the Borrower shall be unable or shall otherwise fail to obtain such a bond or provide such a cash deposit or such an Opinion of Counsel, the Borrower will be required to cause to be satisfied and discharged promptly all such items by payment thereof. If the Borrower shall be unable or shall otherwise fail to obtain such a bond or provide such a cash deposit or such an Opinion of Counsel, or to satisfy and discharge the lien, the Authority or the Trustee will be permitted to, but will be under no obligation to, satisfy and discharge the lien by payment thereof or provide security that shall cause the claimant to release the lien against the Project, and all amounts so paid by the Authority or the Trustee will be treated as an advance to the Borrower repayable in accordance with the provisions of the Loan Agreement described below under the heading “Advances by the Authority or the Trustee.”

The Borrower will not be permitted to, or permit others under its control to, do any work in or about the Project or related to any repair, rebuilding, restoration, replacement, alteration of, or addition to the Project, or any part thereof, unless the Borrower shall have first procured and paid for all requisite municipal and other governmental permits and authorizations. All such work will be required to be done in a good and workmanlike manner and in compliance with all applicable building, zoning, and other laws, ordinances, governmental regulations, and requirements and in accordance with the requirements, rules, and regulations of all insurers under the policies required to be carried under the provisions of the Loan Agreement described below under the heading “Insurance.”

Notwithstanding the provisions of the Loan Agreement described in the first paragraph of this section, pursuant to the Parking Facility Lease and the Ground Lease, the University shall be solely responsible for all necessary and proper repairs, renewals and replacements to the Parking Facility, including external and structural repairs, renewals and replacements. In the event that the Project Periodic Assessment required by the Loan Agreement requires deposits to the Parking Facility Account of the Repair and Replacement Fund, such amounts will be available to the University to make scheduled capital improvements to the Parking Facility as required by the Parking Facility Lease and the Ground Lease or other capital improvements that, in the University’s reasonable discretion, are necessary for the proper care and maintenance of the Parking Facility. The Borrower agrees to cooperate with the University in submitting a requisition for such funds from the Parking Facility Account of the Repair and Replacement Fund in accordance with the Indenture.

Removal of Equipment (Section 6.02)

(a) If no Event of Default under the Loan Agreement, shall have occurred and be continuing, in any instance where the Borrower in its discretion reasonably determines that any items of Equipment or any portion thereof shall have become inadequate, obsolete, worn out, unsuitable, undesirable, or unnecessary, the Borrower will be permitted to remove such items of Equipment or portion thereof from the Property and sell, trade-in, exchange, or otherwise dispose of them (as a whole or in part) without any responsibility or accountability to the Authority or the Trustee therefor, provided that the Borrower will be required either:

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(i) to substitute and install anywhere in the Buildings or on the Property items of replacement equipment or related property having equal or greater value or utility (but not necessarily having the same function) in the operation of the Project for the purpose for which it is intended, provided such removal and substitution shall not impair the nature of the Project, all of which replacement equipment or related property will be required to be free of all liens, security interests, and encumbrances (other than Permitted Encumbrances), to become subject to the lien and security interest of the Leasehold Deed of Trust and the Security Agreement, and to be held by the Borrower on the same terms and conditions as the items originally constituting Equipment, or

(ii) not to make any such substitution and installation, unless in the case of: (A) the sale of any such Equipment, (B) the trade-in of such Equipment for other machinery, furnishings, equipment, or related property not to become part of the Equipment or to become subject to the lien and security interest of the Leasehold Deed of Trust and the Security Agreement, or (C) any other disposition thereof, the Borrower will be required to pay to the Trustee the proceeds of such sale or disposition or an amount equal to the credit received upon such trade-in for deposit into the Redemption Fund. In the case of the sale, trade-in, or other disposition of any such Equipment to an Affiliate of the Borrower, the Borrower will be required to pay to the Trustee an amount equal to the greater of the amounts and credits received therefor or the fair market value thereof at the time of such sale, trade-in, or other disposition for deposit into the Redemption Fund.

All amounts deposited into the Redemption Fund pursuant to the provisions of the Indenture described under this heading will be required to be used to redeem all or a portion of the Bonds issued to finance or refinance the acquisition of such inadequate, obsolete, worn out, unsuitable, undesirable, or unnecessary Equipment or, if such Bonds shall no longer be Outstanding, the redemption of such other Bonds as may be directed by the Borrower in accordance with the provisions of the Indenture. With respect to the Series 2019 Bonds, such amounts will be required to be used to redeem Series 2019 Bonds in accordance with the provisions of the Indenture described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption -- Other Redemptions at Par.” Except to the extent that amounts are deposited into the Redemption Fund, the removal from the Project of any portion of the Equipment pursuant to the provisions of this Section will not entitle the Borrower to any postponement, abatement, or diminution of the Basic Loan Payments.

(b) In the event that prior to such removal and disposition of items of Equipment from the Buildings and the Property, the Borrower shall have acquired and installed machinery, furnishings, equipment, or related property with its own funds that become part of the Equipment and subject to the lien and security interest of the Leasehold Deed of Trust and the Security Agreement and that have equal or greater utility (but not necessarily the same function) as the Equipment to be removed, the Borrower will be permitted to take credit to the extent of the amount so spent by it against the requirement that it either substitute and install other machinery and equipment having equal or greater value (but not necessarily the same function) or that it make payment to the Trustee for deposit into the Redemption Fund.

(c) The Borrower will be required to report promptly to the Trustee each such removal, substitution, sale, or other disposition and to pay to the Trustee such amounts as are required by the provisions of the Loan Agreement described in (a) above to be deposited into the Redemption Fund promptly after the sale, trade-in, or other disposition requiring such payment; provided, that no such report and payment will be required to be made until the amount to be deposited into the Redemption Fund on account of all such sales, trade-ins, or other dispositions not previously reported shall equal, in the aggregate, at least Fifty Thousand Dollars ($50,000) in any Annual Period. All amounts deposited into the Redemption Fund pursuant to the provision of the Loan Agreement described under this heading as a result of the sale, trade-in, exchange, or other disposition of Equipment will be required to be applied to the redemption of all or a portion of the Bonds issued to finance or refinance the acquisition of such Equipment or, if such Bonds are no longer Outstanding, the redemption of such other Bonds as may be directed by the Borrower in accordance with the provisions of the Indenture. All amounts so deposited into the Redemption Fund to be applied to the redemption of the Series 2019 Bonds will be required to be used by the Trustee to redeem Series 2019 Bonds in accordance with the redemption provisions described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption -- Other Redemptions at Par.” The Borrower will not be permitted to remove, or to permit the removal of, any of the Equipment from the Building or the Property except in accordance with the provisions of the Loan Agreement described under this heading.

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Taxes, Other Governmental Charges, and Utility Charges (Section 6.03)

The Borrower will be required to pay, as the same become due, (a) all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project that, if not paid, will become a lien on the Project prior to or on a parity with the lien and security interest of the Leasehold Deed of Trust and the Security Agreement or a charge on the Pledged Revenues prior to or on a parity with the charge and security interest thereon and the pledge or assignment thereof created and made in the Security Agreement and including all ad valorem taxes or payments in lieu of such taxes lawfully assessed upon the Project, (b) all utility and other charges incurred in the ownership, operation, maintenance, use, occupancy, and upkeep of the Project (provided University Utility Services, as defined in the Ground Lease, shall be paid in accordance with the Ground Lease), and (c) all assessments and charges lawfully made by any governmental body for public improvements that may be secured by a lien on the Project; provided, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Borrower will be obligated to pay only such installments as are required to be paid during the Agreement Term. The Borrower anticipates that the Project will be exempt from property taxes, and agrees to take any action as may be required, within the time required by applicable North Carolina law, including filing one or more applications with the Watauga County Tax Assessor’s office, to obtain or maintain the exemption from property taxes.

If the Borrower shall first notify the Trustee of its intention so to do, the Borrower will be permitted, at its own expense and in good faith, to contest any such taxes, assessments, or other charges and, in the event of any such contest, to permit the taxes, assessments, or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom, provided the Borrower shall furnish the Trustee with a bond or a cash deposit equal to at least the amount so contested plus any interest or penalties that might be payable as a result of any late payment, which, in the case of cash, will be required to be placed into an account with the Trustee and held for the purposes described under this heading, or an Opinion of Counsel stating that by nonpayment of any such items, the lien and security interest of the Leasehold Deed of Trust and the Security Agreement will not be materially endangered and neither the Project nor any material part thereof will be subject to imminent loss or forfeiture. The proceeds of such bond or cash deposit may be used by the Trustee to satisfy the lien if action shall be taken to enforce the lien and such action shall not be stayed. Such bond or cash deposit will be returned to the Borrower if the taxes, assessments, or other charges shall be successfully contested. If the Borrower shall be unable or shall otherwise fail to obtain such a bond or provide such a cash deposit or such Opinion of Counsel, such taxes, assessments, or charges will be required to be satisfied and discharged promptly by payment thereof.

Insurance (Sections 4.02, 6.04, 6.05, and 6.06, and 6.07)

(a) The Borrower will agree that it will, at all times during the construction of the Series 2019 Project, maintain or cause the Developer and/or cause to be maintained, to maintain in full force and effect builder’s risk ¬completed value form insurance insuring all buildings, structures, boilers, equipment, facilities, fixtures, supplies, and other property constituting the Series 2019 Project on an “all risk of loss or damage basis,” currently referred to as “special form,” including coverage for soft costs and lost rents due to covered damage and destruction prior to completion in an amount not Iess than Maximum Annual Debt Service, including perils of fire, lightning, and all other risks covered by the extended coverage endorsement then in use in the State of North Carolina to the full replacement cost of the Series 2019 Project. Such policy or policies of insurance will be required to name the Authority, the Borrower, the Trustee, and the University as insureds, as their respective interests may appear, and to name the Trustee as mortgagee under a standard loss payable endorsement providing that no act or omission by the named insured shall in any way prejudice the rights of the Trustee thereunder, and all Net Proceeds received under such policy or policies by the Borrower or the Authority will be required to be required to be paid over to the Trustee and deposited into the Insurance Fund to be applied to the restoration and/or completion of the Series 2019 Project or to the redemption of Series 2019 Bonds in accordance with the provisions of the Loan Agreement described below under the heading “Destruction and Damage.” In addition, the Borrower will be required to cause the Developer and/or the General Contractor at all times during the construction of the Series 2019 Project to maintain (i) general liability insurance in an amount not less than that required to be maintained by the Borrower as described below under this heading and (ii) workers’ compensation insurance as required by law. Such insurance policy or policies will be required to contain a provision that such insurance may not be canceled by the issuer thereof without at least thirty (30) days’ advance written notice (10 days for non-payment of premium). The

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Borrower will promptly forward any notice of cancellation received from an insurance carrier to the Authority, each Bond Insurer and the Trustee.

(b) The Borrower will further agree that it will cause the Developer to require the General Contractor to deliver to the Trustee performance and labor and material payment bonds with respect to the Construction Agreement, and in the full amount thereof, made by the General Contractor as the principal and a surety company or companies, that is or are licensed to do business in the State of North Carolina, rated at least “A” by S&P or “Excellent (A/A-)” by A.M. Best Company, Inc., and otherwise satisfactory and acceptable to the Underwriter and the Series 2019 Bond Insurer, such bonds to be in such forms as are acceptable to the Underwriter and the Series 2019 Bond Insurer. Such bonds will be required to name the Authority, the Borrower, the Trustee, and the University as the obligees, and all Net Proceeds received under said bands will become a part of and be deposited into the Construction Fund, or, if received after the Series 2019 Completion Date, will be used to pay any obligation then owed by the Borrower under the Loan Agreement, and if any Net Proceeds remain, will be deposited into the Revenue Fund.

(c) The Borrower will be required, throughout the Agreement Term, to keep the Project or cause the same to be kept continuously insured against such risks as are customarily insured against with respect to facilities of like size and type, as recommended by an Insurance Consultant, including, but not limited to, the following:

(i) commencing on the Series 2019 Completion Date, insurance upon the repair or replacement basis in an amount of not less than one hundred percent (100%) of the then actual cost of replacement (excluding costs of replacing excavations and foundations, but without deduction for depreciation) of the Project (with deductible provisions not to exceed Twenty-Five Thousand Dollars ($25,000) per occurrence) against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, and smoke and such other risks as are now or hereafter included in the uniform standard extended coverage endorsement in common use for similar structures (including vandalism and malicious mischief);

(ii) commencing on the Series 2019 Completion Date, business interruption insurance (also referred to as “business income” or “loss of rents” insurance) covering loss of revenues and other income by the Borrower by reason of total or partial suspension of, or interruption in, the operation of the Project caused by covered damage to or destruction of the Project in an amount not less than the Maximum Annual Debt Service on the Bonds plus twelve (12) months’ budgeted operating expenses minus those operating expenses avoided as a result of and during the period of interruption and in the event a waiting period applies to the business income/loss of rents coverage, it shall not exceed 30 days per occurrence;

(iii) comprehensive general liability insurance providing insurance (with deductible provisions not to exceed Twenty-Five Thousand Dollars ($25,000) per occurrence) covering all claims for bodily injury and property damage, including not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the aggregate, to include personal and advertising injury, general aggregate, products and completed operations aggregate insurance beginning at the completion of each Project component, and contractual liability to cover all insurable obligations in the Ground Lease;

(iv) commencing on the date any vehicle is acquired or hired by the Borrower for use with respect to the Project, automobile liability insurance providing insurance (with deductible provisions not to exceed Twenty-Five Thousand Dollars ($25,000) per occurrence) to the extent of not less than a combined single limit of One Million Dollars ($1,000,000) per accident covering liability arising out of the use of any Borrower vehicle or such vehicles used in conjunction with the Project, whether owned, non-owned, or hired, and including personal injury protection and uninsured motorist protection in the minimum statutory limits where required by law;

(v) at all times, insurance under the National Flood Insurance Program within the minimum requirements and amounts required for federally financed or assisted loans under the Flood Disaster Protection Act of 1973, as amended, if the Project is eligible under such program;

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(vi) commencing on the date the first employee of the Borrower is hired, workers’ compensation coverage or other similar coverage covering all of the Borrower’s employees on the Premises, as required by the laws of the State of North Carolina, including, with respect to workers’ compensation insurance, Coverage B-Employer’s liability limits of: bodily injury by accident - Five Hundred Thousand Dollars ($500,000) each accident; and bodily injury by disease - Five Hundred Thousand Dollars ($500,000) each employee (and, in this regard, the Borrower shall require all subcontractors performing work on the Project to provide an insurance certificate, showing proof of workers’ compensation insurance);

(vii) to the extent that the Project or any portion thereof contains a steam boiler, pressure vessels, or pressure piping, and commencing on the date on which the same are installed in the Project, boiler explosion insurance on steam boilers, if any, pressure vessels, and pressure piping in an amount not less than one hundred percent (100%) of the then actual cost of replacement (excluding costs of replacing excavations and foundations, but without deduction for depreciation) of the Project (with deductible provisions not to exceed $100,000 per occurrence);

(viii) commencing on the Series 2019 Completion Date, fidelity bonds or employee dishonesty insurance in the amount of One Hundred Thousand Dollars ($100,000) for all officers, agents, and employees of the Borrower with the responsibility of handling Pledged Revenues; and

(ix) additional umbrella or excess liability coverage in the amount of Ten Million Dollars ($10,000,000) in the aggregate, which shall include all coverages required by (iii), (iv), and (vi) above.

(d) The Net Proceeds of the insurance carried pursuant to the provisions of the Loan Agreement described in (i), (v), and (vii) of paragraph (c) above will be required to be paid and applied as described under the heading “Destruction and Damage” below, and the Net Proceeds of insurance carried pursuant to the provisions of the Loan Agreement described in (iii), (iv), and (ix) of paragraph (c) above will be required to be applied toward extinguishment or satisfaction of the liability with respect to which such insurance proceeds have been paid. The Net Proceeds of the insurance carried pursuant to the provisions of the Loan Agreement described in (ii) of paragraph (c) above, up to an amount equal to the Debt Service Reserve Requirement on the Bonds (including any Mandatory Sinking Fund Redemption Requirement) for the succeeding twelve (12) month period, will be required to be deposited into the Bond Fund and used as provided in the Indenture and the balance will be required to be deposited into the Revenue Fund.

(e) All insurance required by the provisions of the Loan Agreement described in paragraph (c) above will be required to be taken out and maintained in generally recognized responsible insurance companies qualified to do business in the State of North Carolina, that may include “captive” insurance companies or governmental insurance pools, and that have a rating of “A-VII” or better by the latest Best Insurance Report. All policies evidencing such insurance will be required to provide for payment to the Issuer, the Borrower, the University, each Bond Insurer and the Trustee as their respective interests may appear, the policies required by the provisions of the Loan Agreement described in (iii) and (iv) of paragraph (c) above will be required to name the Issuer, the University, and the Trustee as additional insureds, and the policies required by the provisions of the Loan Agreement described in (i), (v), and (vii) of paragraph (c) above will be required to name the Trustee as mortgagee and loss payee under the a standard loss payable endorsement providing that no act or omission by the Borrower shall in any way prejudice the rights of the Trustee under such policies and will be required to require that all Net Proceeds of insurance if in excess of Two Hundred Fifty Thousand Dollars ($250,000) for loss or damage covered thereby be paid to the Trustee and applied as described under the heading “Destruction and Damage” below; provided, however, that prior to the occurrence of an Event of Default, all claims regardless of amount will be permitted to be adjusted by the Borrower with the insurers, subject to prior written approval of the Trustee and each Bond Insurer as to any settlement of any claim in excess of Two Hundred Fifty Thousand Dollars ($250,000). A certificate or certificates of the insurers that such insurance is in force and effect will be required to be deposited with the Trustee and each Bond Insurer, and prior to the expiration of any such policy the Borrower will be required to furnish the Trustee and each Bond Insurer with a certificate or certificates that the policy has been renewed or replaced or is no longer required by the Loan Agreement. In lieu of separate policies, the Borrower may, with the prior written consent of each Bond Insurer, maintain one or more blanket policies of insurance having the coverage required by the provisions of the Loan Agreement described in paragraph (c) above. All such policies will be

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required to provide that such insurance may not be canceled by the issuer thereof before the Bonds have been paid in full without at least thirty (30) days’ written notice.

(f) The Borrower will designate an Insurance Consultant. The Borrower will procure from the Insurance Consultant a review of its insurance requirements not less than every three years (commencing three years after the Closing Date for the Series 2019 Bonds) along with making a written recommendation, if necessary, for increasing or decreasing any of the insurance or coverages described above and to furnish a copy of such review to the Trustee, the Series 2019 Bond Insurer, the University and the Underwriter. If any such review by the Insurance Consultant shall contain recommendations for increasing any of such insurance or coverages, the Borrower will be required to increase such insurance or coverages in accordance with such recommendations promptly, if any such review by the Insurance Consultant shall contain recommendations for decreasing any of such insurance or coverages, the Borrower will be permitted to decrease such insurance or coverages in accordance with such recommendations after consultation with the University and each Bond Insurer. In addition, on or before the execution and delivery of the Loan Agreement and, thereafter on the request of the Trustee or a Bond Insurer, the Borrower will furnish to the Trustee and such Bond Insurer a certificate of the Insurance Consultant to the effect that the insurance procured by the Borrower satisfies in all respects the requirements described in paragraphs (c) and (e) of this heading.

Advances by the Authority or the Trustee (Section 6.08)

If the Borrower shall fail to make any payment or perform any act required of it under the Loan Agreement, the Authority or the Trustee will be permitted (but are under no obligation to), after notifying the Borrower of its intention to do so and at the expiration of any applicable cure period, to make such payment or perform such act. All amounts so paid by the Authority or the Trustee and all costs, fees, and expenses so incurred will be payable as an additional obligation under the Loan Agreement and under the Notes, together with interest thereon from the date of payment by the Authority or the Trustee, as applicable, at the Default Rate, payment of which will be secured by the Leasehold Deed of Trust and the Security Agreement. Any remedy in the Loan Agreement vested in the Authority or the Trustee for the collection of the Loan Payments will also be available to the Authority and the Trustee for the collection of all such amounts so advanced. The Trustee will be under no obligation to make any such payment unless it shall be requested to do so by the Requisite Number of Bondholders and shall be provided with adequate funds paid in cash to the Trustee (from a source or sources approved by the Trustee) for the purpose of such payment.

Destruction and Damage (Section 7.01)

(a) In the event that the Project shall be destroyed or damaged (in whole or in part) by fire or other casualty, the Borrower will be required to promptly notify in writing the Authority, each Bond Insurer and the Trustee, and, unless the Bonds are paid in full from the Net Proceeds of insurance resulting from such destruction or damage, to continue to make the Loan Payments and will not be entitled to any postponement, abatement, or diminution thereof.

(b) If such Net Proceeds of insurance shall be less than Two Hundred Fifty Thousand Dollars ($250,000) (which amount will be increased as of each July 1 by a percentage equal to the past year’s increase, if any, in the Consumer Price Index for the Project Jurisdiction (the “CPI Adjustment”) as provided in writing by the Borrower to the Trustee), all such insurance proceeds will be paid to the Borrower, and the Borrower will be required to repair, replace, rebuild, restore, and/or re-equip the Project promptly to substantially the same condition thereof as existed prior to the event causing such destruction or damage with such changes, alterations, and modifications (including the substitution and addition of other property) as may be desired by the Borrower and as will not impair the value or the function of the Project. In the event the Net Proceeds shall not be sufficient to pay in full the costs of any such repair, replacement, rebuilding, restoration, and/or re-equipping, the Borrower will be required nonetheless to complete such work and to pay that portion of the costs thereof in excess of the amount of such Net Proceeds.

(c) If such Net Proceeds of insurance shall be in excess of Two Hundred Fifty Thousand Dollars ($250,000) (plus the applicable CPI Adjustment, if any), all such insurance proceeds will be required to be paid to

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the Trustee and deposited and held in the Insurance Fund to be applied, as fully as practicable, in one or more of the following ways as shall be directed in writing by the Borrower within sixty (60) days from the date of such deposit:

(i) subject to the requirements described under the heading “Conditions Precedent to Repair, Restoration, or Replacement of the Project; Other Requirements” below, such Net Proceeds will be permitted to be applied to the restoration of the Project; or

(ii) subject to the requirements described below, such Net Proceeds will be permitted to be applied to the acquisition of other suitable land and the acquisition, by construction or otherwise, to the extent permitted by applicable law, of improvements consisting of a building or buildings, facilities, furnishings, machinery, equipment, or other properties suitable for the Borrower’s operations at the Project as conducted prior to such destruction or damage (which improvements will be deemed a part of the Project and available for use and occupancy by the Borrower without the payment of any Loan Payments other than as provided in the Loan Agreement to the same extent as if such improvements were specifically described in the Loan Agreement and will be required to be acquired by the Borrower subject to no liens, security interests, or encumbrances prior to or on a parity with the lien and security interest of the Leasehold Deed of Trust and the Security Agreement, other than Permitted Encumbrances); or

(iii) such Net Proceeds will be permitted to be transferred to the Redemption Fund to be applied to the redemption of Bonds; or

(iv) such Net Proceeds will be permitted to be applied in some combination permitted by the foregoing clauses (i), (ii), and (iii) above.

(d) All Net Proceeds deposited into the Redemption Fund pursuant to the provisions of the Loan Agreement described under this heading as a result of the destruction of or damage to the Project will be required to be applied to the redemption of all or a portion of the Bonds issued to finance or refinance the acquisition of such portion of the Project or, if such Bonds shall no longer be Outstanding, the redemption of such other Bonds as may be directed by the Borrower in accordance with the provisions of the Indenture.

(e) All Net Proceeds so deposited into the Redemption Fund to be applied to the redemption of the Series 2019 Bonds will be required to be used to redeem Series 2019 Bonds in accordance with the provisions of the Indenture described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption - Extraordinary Optional Redemption;” provided, that no part of such Net Proceeds will be permitted to be applied to a redemption of the Bonds in whole unless the requirements of the Loan Agreement relating to prepayment in full upon destruction or damage described below under the heading “Option to Prepay the Series 2019 Loan Upon the Occurrence of Certain Extraordinary Events” are met.

(f) Any balance of such Net Proceeds of insurance remaining after application pursuant to the provisions of the Loan Agreement described in (b) or (c) above or remaining because of the failure of the Authorized Borrower Representative to furnish to the Authority, the Trustee, and the Ground Lessor the items required by the provisions of the Loan Agreement described under the heading “Conditions Precedent to Repair, Restoration, or Replacement of the Project; Other Requirements” will be required to be transferred to the Redemption Fund and used to redeem Bonds as described in (d) and (e) above.

Condemnation (Section 7.02)

(a) In the event that title to or the temporary use of the Project or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any Person acting under governmental authority, the Borrower will be required to notify the Authority, each Bond Insurer and the Trustee promptly in writing and, unless the Bonds shall be paid in full from the award made in such eminent domain proceedings, to continue to make the Loan Payments and will not be entitled any postponement, abatement, or diminution thereof.

(b) Except for Net Proceeds received by the Borrower with respect to its own property not included in the Project and not subject to the lien and security interest of the Leasehold Deed of Trust and the Security

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Agreement, the Authority, the Borrower, and the Trustee will be required to cause the Net Proceeds received by them or any of them from any award made in such eminent domain proceedings to be paid to the Trustee and deposited and held in the Condemnation Fund to be applied, as fully as practicable, in one or more of the following ways as shall be directed in writing by the Borrower within sixty (60) days from the date of such deposit:

(ii) subject to the requirements described under the heading “Conditions Precedent to Repair, Restoration, or Replacement of the Project; Other Requirements” below, such Net Proceeds will be permitted to be applied to the acquisition of other suitable land and the acquisition, by construction or otherwise, to the extent permitted by applicable law, of improvements consisting of a building or buildings, facilities, furnishings, machinery, equipment, or other properties suitable for the Borrower’s operations at the Project as conducted prior to such taking (which improvements will be deemed a part of the Project and available for use and occupancy by the Borrower without the payment of any Loan Payments other than as provided in the Loan Agreement to the same extent as if such improvements were specifically described in the Loan Agreement and will be required to be acquired by the Borrower subject to no liens, security interests, or encumbrances prior to or on a parity with the lien and security interest of the Leasehold Deed of Trust and the Security Agreement, other than Permitted Encumbrances); or

(iii) such Net Proceeds will be permitted to be transferred to the Redemption Fund to be applied to the redemption of Bonds; or

(iv) such Net Proceeds will be permitted to be applied in some combination permitted by the foregoing clauses (i), (ii), and (iii) above).

(c) All Net Proceeds deposited into the Redemption Fund as a result of the condemnation of a portion of the Project will be required to be applied to the redemption of all or a portion of the Bonds issued to finance or refinance the acquisition .of such portion of the Project or, if such Bonds shall no longer be Outstanding, the redemption of such other Bonds as may be directed by the Borrower in accordance with the provisions of the Indenture.

(d) All Net Proceeds so deposited into the Redemption Fund to be applied to the redemption of the Series 2019 Bonds will be required to be used to redeem Series 2019 Bonds in accordance with the provisions of the Indenture described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption - ¬Extraordinary Optional Redemption;” provided, that no part of such Net Proceeds will be permitted to be applied to a redemption of the Bonds in whole unless the requirements of the Loan Agreement relating to prepayment in full upon destruction or damage described below under the heading “Option to Prepay the Series 2019 Loan Upon the Occurrence of Certain Extraordinary Events” are met.

(e) Any balance of such Net Proceeds remaining after application pursuant to the provisions of the Loan Agreement described in (b) above or remaining because of the failure of the Authorized Borrower Representative to furnish to the Authority, the Trustee, and the Ground Lessor the items required by the provisions of the Loan Agreement described under the heading “Conditions Precedent to Repair, Restoration, or Replacement of the Project; Other Requirements” will be required to be transferred to the Redemption Fund and used to redeem Bonds as described in (c) and (d) above.

Conditions Precedent to Repair, Restoration, or Replacement of the Project; Other Requirements (Section 7.03)

(a) Before the Trustee may apply any Net Proceeds pursuant to the provisions of the Loan Agreement described in (c)(i), (ii), or (iv) of the caption “Destruction and Damage” above in (b)(i), (ii), or (iv) of the caption “Condemnation” above to pay the costs of repairing, restoring, or and replacing the Project, the Borrower must furnish to the Authority, the Trustee, each Bond Insurer, the Ground Lessor, and the University (i) a construction

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contract and any architect’s agreement relating to such repair, restoration, or replacement, (ii) complete plans and specifications relating to such repair, restoration, or replacement (the “Restoration Plans and Specifications”), (iii) a certificate of an Independent Engineer that states that such repair, restoration, or replacement, if completed in accordance with the Restoration Plans and Specifications, will (A) restore the Project to substantially the condition thereof immediately preceding the damage, destruction, or condemnation and (B) comply with all applicable statutes, codes, and regulations; (iv) a certificate of an Authorized Borrower Representative stating that sufficient moneys are available to (A) pay for such repair, restoration, or replacement and, (B) together with available business interruption insurance proceeds and other available Pledged Revenues, pay Debt Service. Payments on the Bonds and Expenses during the period of repair, restoration, or replacement; (v) applicable lien waivers or conditional lien waivers; (vi) evidence of the existence of performance and payment bonds for the applicable general contractor; and (vii) evidence that the Borrower has acquired all permits and licenses necessary for such construction; and, if such net proceeds are in excess of Two Hundred Fifty Thousand Dollars ($250,000) (plus the applicable CPI Adjustment, if any), in addition to those requirements listed in (i) through (vii) above, the Borrower will also be required to deliver to the Trustee: (viii) an endorsement to the applicable title insurance policy insuring the continued priority of the lien of the Leasehold Deed of Trust and (ix) an opinion of Bond Counsel to the effect that neither such repair, replacement, nor restoration nor such use of such casualty or condemnation proceeds will adversely affect the excludability from gross income for federal income tax purposes of interest on the Tax-Exempt Bonds.

(b) The Trustee will be required to retain ten percent (10%) of the requested disbursements to be disbursed upon final completion of the repair, replacement, or restoration as certified by an Independent Architect and receipt of certificates of occupancy, waivers of liens and, if such Net Proceeds shall be in excess of Two Hundred Fifty Thousand Dollars ($250,000) (plus the applicable CPI Adjustment, if any), an endorsement to the title insurance policy or policies required by the provisions of the Loan Agreement insuring the continued priority of the Leasehold Deed of Trust. If at any time during the period of repair, restoration, or replacement, the insurance or casualty proceeds shall be less than the estimated remaining costs to restore, repair, or replace the Project, the Borrower will be required to provide the Trustee with cash or cash equivalents in an amount equal to the shortfall.

General Options to Terminate the Loan Agreement (Section 11.01)

The Borrower will have the following options to terminate the Loan Agreement at any time prior to full payment of the Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture). The Borrower will be permitted to terminate the Agreement Term by (a) paying to the Trustee an amount that, when added to the amount on deposit in the Bond Fund and the Redemption Fund, will be sufficient to pay, retire, and redeem all of the Outstanding Bonds in accordance with the provisions of the Indenture (including, without limiting the generality of the foregoing, principal, redemption premium, interest to maturity or earliest applicable redemption date, as the case may be, premium, if any, expenses of redemption, and Trustee’s and paying agents’ fees and expenses, including reasonable attorneys’ fees), (b) in the case of redemption, making arrangements satisfactory to the Trustee for the giving of the required, irrevocable notice of redemption, (c) paying to the Authority any and all sums then due to the Authority under the Loan Agreement, and (d) otherwise complying with the provisions of the Indenture described below under the heading “The Indenture - Discharge of Lien.” If the Ground Lessor shall exercise the option granted to it pursuant to the Ground Lease to purchase the Project, the Borrower will be required to exercise the option described in this paragraph.

Option to Prepay the Series 2019 Loan Upon the Occurrence of Certain Extraordinary Events (Section 11.02)

(a) The Borrower will have the option to prepay the Series 2019 Loan in full or in part prior to the full payment of all of the Series 2019 Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture):

(i) in full if Building 100 and the Parking Facility have been destroyed or damaged to such an extent that, in the opinion of an Independent Engineer expressed in a certificate filed with the Trustee, each Bond Insurer and the Authority, (A) Building 100 and the Parking Facility cannot reasonably be restored within a period of twelve (12) months to the condition thereof immediately preceding such destruction or damage, or (B) the Borrower will thereby be prevented from carrying on its normal operations thereat for a period of not less than twelve (12) consecutive months, or (C) the cost of

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restoration or replacement thereof would exceed the Net Proceeds of insurance payable in respect of such destruction or damage,

(ii) in full if title to, or the temporary use of, a substantial portion of Building 100 and the Parking Facility have been taken under the exercise of the power of eminent domain by any governmental authority or Person acting under governmental authority to such an extent that, in the opinion of an Independent Engineer expressed in a certificate filed with the Trustee, each Bond Insurer and the Authority, (A) Building 100 and the Parking Facility cannot be reasonably restored or replaced within a period of twelve (12) months to substantially the condition thereof immediately preceding such taking, or (B) the Borrower will thereby be prevented from carrying on its normal operations thereat for a period of not less than twelve (12) consecutive months, or (C) the cost of restoration or replacement thereof would exceed the total amount of compensation for such taking, or

(iii) in part in the event of partial condemnation or destruction of, or partial damage to, only Building 100 or the Parking Facility, or partial condemnation or destruction of, or partial damage to, either of them, from the Net Proceeds received by the Borrower as a result of such taking, destruction, or damage to the extent such Net Proceeds are not used for the restoration of Building 100 or the Parking Facility, as applicable, or for the acquisition of substitute property suitable for the Borrower’s operations at Building 100 or the Parking Facility, as applicable, as such operations were conducted prior to such taking, destruction, or damage if the Borrower furnishes to the Trustee, each Bond Insurer and the Authority (A) a certificate of an Independent Engineer stating (1) that the property forming a part of Building 100 or the Parking Facility that was taken, destroyed, or damaged is not essential to the Borrower’s use or occupancy of Building 100 or the Parking Facility at substantially the same revenue-producing level as prior to such taking, destruction, or damage, or (2) that Building 100 or the Parking Facility has been restored to a condition substantially equivalent to its condition prior to such taking, destruction, or damage, or (3) that the Borrower has acquired suitable land and improvements that are substantially equivalent to the property forming a part of Building 100 or the Parking Facility that was taken, destroyed, or damaged or (13) a written report of a Financial Consultant filed with the Trustee, each Bond Insurer and the Authority that the Fixed Charges Coverage Ratio for each of the two (2) Annual Periods following the Annual Period following such taking, destruction, or damage will not be less than the lesser of (1) 1.20 and (2) the average Fixed Charges Coverage Ratio for the two (2) most recent Annual Periods prior to such taking, destruction, or damage for which audited financial statements are available.

(b) In the case of the occurrence of any of the events described in (a) above, the Borrower, if it shall exercise its option to prepay the Series 2019 Loan, will be required to prepay the Series 2019 Loan within one hundred eighty (180) days after such event.

(c) To exercise such option, the Borrower will be required, within sixty (60) days following the event authorizing the exercise of such option, to give written notice of the exercise of such option to the Authority, each Bond Insurer and to the Trustee and to specify therein the date of tender of such prepayment, which date shall not be less than forty-five (45), nor more than one hundred twenty (120), days from the date such notice is mailed, and to make arrangements satisfactory to the Trustee for the giving of the required notice of redemption.

(d) The amount payable by the Borrower in the event of its exercise of the option to prepay the Series 2019 Loan in full will be the sum of the following:

(i) an amount of money that, when added to the amount then on deposit in the Bond Fund, the Redemption Fund, and the Debt Service Reserve Fund (taking into account the facts that no amounts in the Tax-Exempt Account of the Debt Service Reserve Fund may be used to pay the Debt Service Payments on the Series 2019B Bonds and that no amounts in the Taxable Account of the Debt Service Reserve Fund may be used to pay the Debt Service Payments on the Series 2019A Bonds) will be sufficient to retire and redeem all the then Outstanding Series 2019 Bonds on the applicable redemption date provided by the Indenture, including without limitation, principal, all interest to accrue to the redemption date, and redemption expense, but without premium, plus

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(ii) an amount of money equal to the Trustee’s and paying agents’ fees and expenses, including reasonable attorneys’ fees and expenses, under the Indenture accrued and to accrue until such final payment and redemption of the Series 2019 Bonds, plus

(iii) an amount of money equal to the Authority’s reimbursable expenses under the Loan Agreement accrued and to accrue until such final payment and redemption of the Series 2019 Bonds.

(e) The amount payable by the Borrower in the event of its exercise of the option to prepay the Series 2019 Loan in part will be the sum of the following:

(i) an amount of money that, when added to the amount then on deposit in the Bond Fund and the Redemption Fund, will be sufficient to retire and redeem the Series 2019 Bonds that are to be redeemed on the applicable redemption date provided by the Indenture, including without limitation, principal, all interest to accrue to the redemption date, and redemption expense, but without premium, plus

(ii) an amount of money equal to the Trustee’s and paying agents’ fees and expenses, including reasonable attorneys’ fees and expenses relating to such redemption, plus,

(iii) an amount of money equal to the Authority’s reimbursable expenses under the Loan Agreement relating to such redemption.

Option to Prepay Loan in Connection with Optional Redemption of the Bonds (Section 11.03)

The Borrower will have the option to prepay the Series 2019 Loan by prepaying Basic Loan Payments due under the Loan Agreement in such manner and amounts as will enable the Authority to redeem the Series 2019 Bonds prior to maturity in whole or in part on any date, as described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption -- Optional Redemption.” The Basic Loan Payments payable by the Borrower in the event of its exercise of such option will be, (i) in the case of partial redemption, the amount necessary to pay principal, all interest to accrue to the redemption date, the applicable redemption premium, as described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption -- Optional Redemption,” and any redemption expense and (ii) in the case of a total redemption, the amounts described below under the heading “The Indenture - Discharge of Lien” and the applicable redemption premium, as described in the Official Statement under the subheading “The Series 2019 Bonds - Redemption -- Optional Redemption.”

Financial Statements (Section 8.05)

(a) The Borrower will be required to provide the Trustee, each Bond Insurer, the Dissemination Agent, and the University annually, within one hundred eighty (180) days after the end of each Annual Period, beginning with the Annual Period ending June 30, 2021, the audited financial statements of the Borrower relating to the Project, including its balance sheet, statement of revenue, expenses, and changes in fund balance (deficit), and statement of cash flow, for the year then ended in comparative form for the preceding Annual Period, which financial statements will be required to be prepared in accordance with GAAP and accompanied by an Audit Report.

(b) The financial statements to be furnished to the Trustee, each Bond Insurer, the Dissemination Agent, and the University annually pursuant to clause (a) above will be required to be accompanied by a calculation of (1) the Fixed Charges Coverage Ratio and (ii) the amount of the Operating Account Surplus, if any, and by a certificate of the Borrower to the effect that no Event of Default on the part of the Borrower under any provision of the Loan Agreement has occurred and is continuing and that the Borrower has fully complied with all of the provisions of the Loan Agreement in all material respects thereof, or if an Event of Default on the part of the Borrower under any provision of the Loan Agreement has occurred and is continuing or the Borrower has failed to comply with all of the provisions of the Loan Agreement, setting forth the nature of each thereof as applicable. The calculation of the Fixed Charges Coverage Ratio shall indicate the amount of Capitalized Interest, if any, included in the Revenue Available for Fixed Charge Coverage Ratio to be at least 1.20.

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Covenants Regarding Maintenance of Borrower’s and Beyond Owners Group’s Status (Section 8.03)

(a) The Borrower will be required (i) to maintain its legal existence as a single member limited liability company organized under the laws of the State of Delaware whose sole member is a Tax-Exempt Organization, (ii) to cause Beyond Owners Group to maintain its legal existence as a Tax-Exempt Organization and a non-profit corporation organized under the laws of the Commonwealth of Pennsylvania, (iii) not, except as permitted by the provisions of the Loan Agreement described under this heading, to consolidate with or merge into another entity or permit another entity to consolidate with or merge into it, (iv) not to dissolve or otherwise dispose of all or substantially all of its assets, (v) to cause Beyond Owners Group to file all required reports and documents with the IRS so as to maintain its status as a Tax-Exempt Organization, (vi) not to operate the Project in any manner nor engage in any activities or take any action that might reasonably be expected to result in Beyond Owners Group’s ceasing to be a Tax-Exempt Organization, and (vii) to notify the Authority and the Trustee promptly in writing of any loss of the Beyond Owners Group’s status as a Tax-Exempt Organization or of any investigation, proceeding, or ruling that might result in such loss of status. The Borrower will be required to preserve and keep in full force and effect all licenses and permits necessary to the proper conduct of its business.

(b) The Borrower will covenant that none of its or the Beyond Owners Group’s revenues, income, or profits, whether realized or unrealized, will be distributed to any of its or the Beyond Owners Group’s directors or inure to the benefit of any private Person, other than for the lawful corporate purposes of the Borrower or the Beyond Owners Group; provided, however, that the Borrower and Beyond Owners Group will be permitted to pay to any Person the value of any service or product performed for, or supplied to, the Borrower or the Beyond Owners Group by such Person. The Borrower will further covenant that it and the Beyond Owners Group will take such actions as are necessary or appropriate and within their respective control to take to comply with the provisions of the Code and the Regulations in order to preserve the exclusion of the interest paid on the Tax-Exempt Bonds from the gross income of the Owners thereof for federal income tax purposes and will not act or fail to act in any other manner that would adversely affect such exclusion. In connection with the foregoing, the Borrower will agree to comply with the provisions of the Tax Agreement.

(c) The Borrower will be permitted, without violating the covenants described under this heading, to consolidate, merge, sell, or otherwise transfer to another Person all or substantially all of its assets as an entirety (and thereafter dissolve), provided (i) such consolidation, merger, sale, or other transfer shall not otherwise cause an Event of Default and (ii) the surviving, resulting, or transferee Person (A) shall be authorized to do business in the State of North Carolina, (B) shall be a domestic corporation, limited liability company, partnership, or other entity, or, if a natural person, a resident of the United States of America, (C) shall have the power to assume and shall assume in writing all of the obligations of the Borrower under the Loan Agreement, the Notes, and the other Borrower Documents and shall deliver to the Trustee and each Bond Insurer any security agreement necessary to ensure that after such consolidation, merger, sale, or other transfer, the Trustee shall have a security interest in all assets that constitute, or would have constituted, Collateral (as defined in the Security Agreement) prior to such consolidation, merger, sale, or transfer, together with an Opinion of Counsel that all action has been taken to perfect such security interest to the extent perfection can be made by the filing of financing statements, (D) shall obtain all licenses and permits required by law to operate the Project, (E) shall deliver to the Trustee and each Bond Insurer a title insurance policy or endorsement insuring that the surviving, resulting, or transferee Person has a valid leasehold interest in the Property and insuring the Leasehold Deed of Trust as a first lien subject only to the Permitted Encumbrances, (F) shall deliver to the Trustee and each Bond Insurer an Opinion of Counsel to the effect that the Loan Agreement, the Notes, and the other Borrower Documents, as assumed by the surviving, resulting, or transferee Person, are valid and enforceable obligations of such Person, subject only to exceptions related to bankruptcy and other customary exceptions, (G) shall deliver a Favorable Opinion of Bond Counsel, (H) shall have a fund balance or net worth, as the case may be, after the transfer or merger, as reflected in the pro forma financial statements required to be furnished pursuant to this Section, not less than the fund balance or net worth, as the case may be, of the Borrower, as reflected in the most recent audited balance sheet of the Borrower furnished to the Trustee pursuant to the Loan Agreement, and (I) shall have a Fixed Charges Coverage Ratio not less than that of the Borrower on a pro forma basis that gives effect to such consolidation, merger, sale, or transfer, which pro forma basis financial statements shall be accompanied by a report of the Accountant with respect to any historical pro forma basis financial statements stating the Fixed Charges Coverage Ratio for the periods reported on; and (iii) each Bond Insurer has provided its prior written consent.

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(d) The Borrower will also be permitted, without violating any covenants contained in the Loan Agreement, to sell, or otherwise transfer the Project to another Person that is controlled solely by the Borrower or the Beyond Owners Group and that, prior to such sale or transfer, has no assets or liabilities, upon completion or satisfaction of the conditions described in items (i) and (ii)(A) through (0) of (c) above, and upon such completion or satisfaction will be released from all liabilities and obligations under the Loan Agreement, the Notes, and the other Borrower Documents.

(e) The Borrower will warrant that it is and while the Loan Agreement is in effect it (or the surviving, resulting, or transferee entity permitted by the provisions of the Loan Agreement described under this heading) will continue to be authorized to do business in the State of North Carolina.

Financial Covenants

Rate Covenant. The Borrower will be required to operate the Parking Facility as a revenue producing parking garage (either through the charging of rent to the University under the Parking Facility Lease, or, in the event the Parking Facility Lease is no longer in effect, by charging students, faculty and other users of the Parking Facility for the use thereof, and the Student Housing Facilities as revenue producing student housing facilities (along with related facilities), and to the extent permitted by law and by the Ground Lease, to charge such fees and rates for its facilities and services and to exercise such skill and diligence as will provide Revenue Available for Fixed Charges, together with other available funds, sufficient to pay promptly all expenses of operation, maintenance, and repair of the Project and to provide all payments required to be made by the Borrower under the Loan Agreement. Such rates, fees, and charges in each Annual Period beginning with the Annual Period in which the Series 2019 Completion Date occurs, will be required to be sufficient to produce a Fixed Charges Coverage Ratio of at least 1.20. In the event that it shall be determined, based upon the audited financial statements and calculation of the Borrower required to be furnished by the provisions of the Loan Agreement described above under the heading “Financial Statements,” that for any Annual Period such Fixed Charges Coverage Ratio shall not have been maintained, the Borrower will be required, within thirty (30) days of receipt of such financial statements, to engage a Financial Consultant to submit to the Borrower, each Bond Insurer and the Trustee a report of such firm containing recommendations, if any, as to changes in the operating policies of the Borrower designed to maintain such Fixed Charges Coverage Ratio, to cause such Financial Consultant to prepare and submit such recommendations within sixty (60) days of the date of its engagement and to implement such recommendations promptly to the extent permitted by law and by the terms and conditions of the Ground Lease. So long as (i) the Fixed Charges Coverage Ratio does not fall below 1.00, and (ii) the Financial Consultant’s recommendations are followed, no Event of Default will occur, however, the Borrower is obligated to employ such a Financial Consultant for such purpose until such rates, fees, and charges produce a Fixed Charges Coverage Ratio of at least 1.20 during the then current Annual Period.

The Borrower will, from time to time as often as necessary, to the extent permitted by law and pursuant to the terms and conditions of the Ground Lease, revise the rates, fees, and charges aforesaid in such manner as may be necessary or proper so that the Revenue Available for Fixed Charges will be sufficient to meet the requirements of the Loan Agreement, and will take all action within its power to obtain approvals of any regulatory or supervisory authority to implement any rates, fees, and charges required by the Loan Agreement.

Annual Budget. At least 30 days prior to the first day of each Annual Period commencing with the Annual Period ended June 30, 2021, the Borrower will prepare the Annual Budget for the immediately succeeding Annual Period which will include all monthly budgeted Expenses and Subordinated Expenses of the Project (excluding the University Space) for such Annual Period. If the Borrower fails to prepare the Annual Budget for any Annual Period, the Annual Budget for the immediately preceding Annual Period will continue in effect until the Annual Budget is prepared for the remainder of the applicable Annual Period. Such Annual Budget may take into account any Operating Account Surplus anticipated to be held in the Operating Account at the end of the Annual Period immediately preceding the Annual Period for which the Annual Budget is being prepared.

To the extent that the Borrower shall deem it necessary at any time during any Annual Period, the Borrower will be required to submit a revised Annual Budget to the Authority, the Trustee, and the University declaring that the revisions are necessary to operate or maintain the Project and setting forth the reasons therefor which revised

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Annual Budget will, for all purposes of the Loan Agreement, be deemed the Annual Budget for the remainder of the applicable Annual Period.

A copy of each Annual Budget or revised Annual Budget will be required to be furnished to the Trustee, each Bond Insurer and the University. The Annual Budget or revised Annual Budget will be required to be accompanied by a certificate of the Borrower to the effect that the Fixed Charges Coverage Ratio for the Annual Period to which such Annual Budget relates, based on the projected Revenues and Expenses set forth therein, will not be less than 1.20.

In the event the Borrower shall fail to provide the above-described certificate, a Financial Consultant will be required to be engaged by the Borrower to review and/or revise the Annual Budget and to so certify to the Trustee, each Bond Insurer and the University and, to the extent such Financial Consultant shall revise the proposed Annual Budget, such revised Annual Budget will, for all purposes of the Loan Agreement and all other Bond Documents, be deemed the Annual Budget for the remainder of the applicable Annual Period.

Continuing Disclosure Matters (Section 8.08)

Under the Loan Agreement, the Borrower will be required all at all times to remain party to the Continuing Disclosure Agreement, or if the Continuing Disclosure Agreement shall terminate, to enter into a similar agreement to provide for the dissemination of the financial statements and notices required by Rule 15c2-12 under the Securities and Exchange Act of 1934, as amended.

Covenant Regarding Manager (Section 8.11)

The Borrower will agree that if the initial Manager shall cease to serve as Manager, the Borrower will promptly employ, and at all times thereafter, employ, as the Manager a recognized manager of student housing facilities acceptable to the Ground Lessor and each Bond Insurer that then manages, and shall have for the past five (5) years managed, at least five thousand (5,000) beds of student housing. Prior to entering into a contract with any successor Manager, which contract is subject to the prior written consent of each Bond Insurer, the Borrower will first deliver to the Trustee a Favorable Opinion of Bond Counsel,

Covenants With Respect to Arbitrage Rebate (Section 8.12)

The Borrower will (i) calculate the Rebate Amount as of each Calculation Date, (ii) transmit a copy of such calculation to the Trustee, and (iii) pay to the Trustee for deposit to the Rebate Fund or direct the Trustee to transfer from the Funds and in the order of priority set forth in paragraph (d) under the heading “The Indenture — Rebate Fund” below an amount equal to the difference, if any, between the amount then in the Rebate Fund and the Rebate Amount so calculated, If, as of any Calculation Date, the amount in the Rebate Fund shall exceed the Rebate Amount, the Borrower will be permitted to direct the Trustee to transfer such excess from the Rebate Fund to the Revenue Fund or as otherwise directed by a Favorable Opinion of Bond Counsel.

The Borrower will be required to pay, or shall direct the Trustee to pay, to the United States of America from the amounts on deposit in the Rebate Fund, all amounts required to be paid to the United States of America under §148(f) of the Code and the Regulations promulgated thereunder, to complete and file any IRS form that must accompany each such payment to the United States of America, and to provide a copy of any such form to the Trustee.

Notwithstanding any provision of the Loan Agreement described under this heading, if the Borrower shall provide, at the Borrower’s expense, to the Trustee and to the Authority an opinion of Bond Counsel to the effect that any action required under provision of the Loan Agreement described under this heading or the provisions of the Indenture described below under the heading “The Indenture — Rebate Fund” shall no longer be required, or to the effect that some further action shall be required, to maintain the excludability from gross income of interest on the Tax-Exempt Bonds pursuant to §103(a) of the Code, the Borrower, the Authority, and the Trustee will be permitted to rely conclusively on such opinion in complying with the provisions of the Loan Agreement described under this heading or the provisions of the Indenture described below under the heading “The Indenture — Rebate

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Fund,” and the covenants of the Borrower described under this heading will be deemed to be modified to that extent.

Annual Compliance Certificate (Section 8.13)

For each year that the Loan Agreement is in effect, beginning January 31, 2022, the Borrower will furnish to the Authority and the Trustee on or before January 31, a certificate of the Borrower, signed by an Authorized Borrower Representative, (a) stating that the Borrower has made a review of its activities during the preceding Annual Period for the purpose of determining whether or not the Borrower has complied with all the terms, covenants, provisions, and conditions of the Borrower Documents on its part to be kept, observed, performed, or fulfilled and (b) either (i) stating that the Borrower has kept, observed, performed, and fulfilled each and every such term covenant, provision, and condition in all material respects, or (ii) providing a description of any failure on its part to keep, observe, perform, or fulfill any such term, covenant, provision, or condition. The Borrower will also promptly provide the Authority with such information as it reasonably requests, including, without limitation, information as to employee levels, financial status, and outstanding principal balance of the Bonds.

Reimbursement of Series 2019 Bond Insurer (Section 8.14)

The Borrower will pay or reimburse the Series 2019 Bond Insurer any and all charges, fees, costs and expenses that the Series 2019 Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Bond Document; (ii) the pursuit of any remedies under the Indenture, the Loan Agreement or any other Bond Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Indenture or any other Bond Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Indenture or any other Bond Document or the transactions contemplated thereby, other than costs resulting from the failure of the Series 2019 Bond Insurer to honor its obligations under the Series 2019 Bond Insurance Policy. The Series 2019 Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Indenture or any other Bond Document.

Borrower Covenants Regarding Underlying Ratings (Section 8.15)

No sooner than two (2) years and no later than four (4) years following the Series 2019 Completion Date, the Borrower, as an Expense, will submit a request to the Rating Agencies that provided underlying credit ratings on the Closing Date to review the Borrower’s credit profile for consideration of an upgrade to the underlying rating and outlook to the Series 2019 Bonds.

The Borrower will continually maintain an underlying rating on the Series 2019 Bonds from at least one Rating Agency.

Assignment and Subleasing; Restrictions on Encumbrances (Sections 9.01 and 9.02)

(a) The Borrower will be permitted to enter into subleases with occupants of the Student Housing Facilities (which includes residence hall agreements, leases, licenses, or other similar agreements in accordance with University practice and retail leases) without complying with the provisions described below other than item (vii). With the prior written consent of each Bond Insurer, the rights of the Borrower under the Loan Agreement may be assigned and delegated, and the Project may be subleased, as a whole or in part, by the Borrower, without the necessity of obtaining the consent of either the Authority or the Trustee (but with the prior written consent of each Bond Insurer), subject, however, to each of the following conditions:

(i) No assignment (other than in connection with a consolidation, merger, disposition, or transfer described above under the heading “Covenants Regarding Maintenance of Borrower’s and Beyond Owners Group’s Status”) or sublease will relieve the Borrower from primary liability for any of its obligations under the Loan Agreement, and in the event of any such assignment or sublease, the Borrower will continue to remain primarily liable for payment of the Loan Payments and for the payment,

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performance, and observance of the other obligations and agreements on its part in the Loan Agreement provided to be performed and observed by it.

(ii) The assignee will be required to assume in writing the obligations of the Borrower under the Loan Agreement to the extent of the interest assigned.

(iii) The Borrower will be required to furnish or cause to be furnished to the Authority and the Trustee assurances reasonably satisfactory to the Authority and the Trustee that the Project will continue to be operated as a student housing facility and related facilities in accordance with the terms of the Loan Agreement.

(iv) No assignment or sublease with any Person may be entered into by the Borrower without the Borrower’s first furnishing to the Trustee a Favorable Opinion of Bond Counsel or a ruling from the IRS to the effect that such assignment or sublease will not bring about an Event of Taxability.

(v) No such assignment or sublease will give rise to a novation.

(vi) The Borrower will be required, within thirty (30) days after the execution thereof, to furnish or cause to be furnished to the Authority, each Bond Insurer and the Trustee a true and complete copy of each such assignment or sublease, as the case may be,

(vii) All subleases will be required, to the extent required by the laws of the State of North Carolina, to contain an attornment clause providing in effect that if at any time during the term of the sublease, the Trustee, the designee of the Trustee, or a subsequent purchaser at a foreclosure sale from the Trustee, shall become the owner of the Project, such sublessee agrees, at the election and upon demand of any owner of the Project, to attorn, from time to time, to any such owner upon the terms and conditions set forth in the sublease.

(b) The Borrower will not be permitted, except under the specific circumstances provided by the Bond Documents, (i) to sell, convey, or otherwise dispose of any part of its interest in the Project during the Agreement Term directly, indirectly, or beneficially, (ii) to permit any part of the Premises to become subject to any mortgage, lien, claim of title, encumbrance, security interest, conditional sale contract, title retention arrangement, finance lease, or other charge of any kind, except for Permitted Encumbrances or except as otherwise permitted under the Indenture (with respect to the issuance of Additional Bonds) or under the Loan Agreement, or (iii) to assign, transfer, or hypothecate (other than to the Trustee) any rent (or analogous payment) then due or to accrue in the future under any sublease of the Premises, except for Permitted Encumbrances or except as otherwise permitted by the provisions of the Loan Agreement described under this heading.

Events of Default (Section 10.01)

The Loan Agreement provides that the occurrence of any one or more of the following will constitute an “Event of Default:”

(a) The Borrower fails to pay the Basic Loan Payments sufficient to pay the Debt Service Payments due on each Bond Payment Date.

(b) Any representation or warranty made by the Borrower in any statement or certificate furnished to the Authority or the Trustee or each Bond Insurer or the purchaser of any Bonds, in connection with the sale of any Bonds or furnished by the Borrower pursuant to the Loan Agreement, shall prove to have been inaccurate in any material respect as of the date of the issuance or making thereof and shall not have been corrected within thirty (30) days after written notice specifying such inaccuracy shall have been given to the Borrower by the Authority, any Bond Insurer, the Trustee, any Bond Insurer or such purchaser. In the case of any such inaccuracy that cannot with due diligence be corrected within such thirty (30) day period, but that can be wholly corrected within a period of time not materially detrimental to the rights of the Trustee and each Bond Insurer, it shall not constitute an Event of Default if corrective action shall be instituted by the Borrower within the applicable period and diligently pursued

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until the inaccuracy shall have been corrected in accordance with and subject to any directions or limitations of time established in writing by the Trustee and each Bond Insurer has consented to such extension in writing.

(c) The Borrower shall fail to perform or cause to be performed any other covenant, condition, or provision of the Loan Agreement, other than as referred to in (a) above or any covenant relating to the Continuing Disclosure Agreement, and to correct such failure within thirty (30) days after written notice specifying such failure shall have been given to the Borrower by the Authority, any Bond Insurer or the Trustee. In the case of any such failure that cannot with due diligence be corrected within such thirty (30) day period, but that can be wholly corrected within a period of time not materially detrimental to the rights of the Trustee and each Bond Insurer, it shall not constitute an Event of Default if corrective action is instituted by the Borrower within the applicable period and diligently pursued until the failure is corrected in accordance with and subject to any directions or limitations of time established in writing by the Trustee and each Bond Insurer has consented to such extension in writing.

(d) The Borrower shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of it or of all or a substantial part of its property or of the Project, (ii) fail to lift or bond promptly (if legally permissible) any execution, garnishment, or attachment of such consequence as will impair the ability of the Borrower to carry on its operations at the Project, (iii) enter into an agreement of composition with its creditors, (iv) admit in writing its inability to pay its debts as such debts shall become due, (v) make a general assignment for the benefit of its creditors, (vi) commence a voluntary case under the federal bankruptcy law or any similar law in effect in a foreign jurisdiction (as now or hereafter in effect), (vii) file a petition or answer seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, (viii) fail to controvert in a timely or appropriate manner or acquiesce in writing to any petition filed against it in an involuntary case under such federal bankruptcy law or any similar law in effect in a foreign jurisdiction (as now or hereafter in effect), or (ix) take any action for the purpose of effecting any of the foregoing.

(e) A proceeding or case shall be commenced, without the application of the Borrower, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding-up, or composition or adjustment of debts of the Borrower, (ii) the appointment of a trustee, receiver, custodian, liquidator, or the like of the Borrower or of all or any substantial part of its assets, or (iii) similar relief in respect of the Borrower under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition and adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment, or decree approving or ordering any of the foregoing shall be entered and shall continue unvacated and unstayed and in effect, for a period of ninety (90) days, whether consecutive or not.

(f) The Fixed Charges Coverage Ratio for any Annual Period in which compliance with the rate covenant described above under the heading “Financial Covenants — Rate Covenant” is less than 1.0.

(g) The occurrence of an event of default under any of the Bond Documents other than the Continuing Disclosure Agreement.

Remedies (Section 10.02)

(a) Whenever any Event of Default referred to under (a) in the immediately preceding heading “Events of Default” occurs and is continuing, the Authority, or the Trustee as the assignee of the Authority, to the extent permitted by law, may at its option, which may be exercised separately and independently from any similar option under the Indenture, to declare all unpaid installments of Basic Loan Payments and other amounts payable under the Loan Agreement as described above under the heading “Loan Payments and Other Amounts Payable” for the remainder of the Agreement Term to be immediately due and payable whereupon the same will become immediately due and payable, it being understood that upon a declaration of acceleration by the Trustee under the Indenture, all such unpaid Basic Loan Payments and other amounts will become immediately due and payable; provided, however, that if acceleration of the Bonds shall have been rescinded and annulled pursuant to the Indenture, acceleration of the Basic Loan Payments and other amounts payable under the Loan Agreement required the provisions of the Loan Agreement described in this paragraph shall similarly be rescinded and annulled and the Event of Default occasioning such acceleration will be waived, but no such waiver, rescission, and annulment will

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extend to or affect any subsequent Event of Default or impair or exhaust any right, power, or remedy consequent thereon.

With respect to any Event of Default referred to in the immediately preceding heading “Events of Default” occurs and is continuing, the Authority, or the Trustee as the assignee of the Authority, at its option, which may be exercised separately and independently from any similar option under the Indenture will:

(i) have access to and inspect, examine, and make copies of the books and records and any and all accounts, similar data, and income tax and other tax returns of the Borrower; or

(ii) from time to time, take whatever action at law or in equity or under the terms of the Bond Documents may appear necessary or desirable to collect the Loan Payments and other amounts payable under the Loan Agreement as described above under the heading “Loan Payments and Other Amounts Payable” or to enforce performance and observance of any obligation, agreement, or covenant of the Borrower under the Loan Agreement.

Amounts collected pursuant to actions described above will be applied in accordance with the provisions of the Indenture, or, if the Bonds shall have been paid in full (or provision for payment thereof shall have been made in accordance with the provisions of the Indenture) and the Borrower shall have paid the Authority and the Trustee all amounts due and owing under the Loan Agreement, then any amounts remaining will be paid to the University.

No Remedy Exclusive (Section 10.03)

No remedy conferred upon or reserved to the Trustee, as assignee of the Authority, in the Loan Agreement will be intended to be exclusive of any other available remedy or remedies, but each and every such remedy will he cumulative and in addition to every other remedy given under the Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing on arty Event of Default will impair any such right or power or be construed to be a waiver thereof, but any such right and power will be permitted to be exercised from time to time and as often as may be deemed expedient. In order to entitle the Trustee to exercise any remedy reserved to it in the Loan Agreement, it will not be necessary to give any notice, other than such notice as may be expressly required in the Loan Agreement. Such rights and remedies as are given the Authority under the Loan Agreement will also extend to the Trustee, and the Trustee and the owners of the Bonds will be deemed third party beneficiaries of all covenants and agreements contained in the Loan Agreement.

Waiver of Events of Default (Section 10.05)

The Trustee, on behalf of the Authority, will be permitted to waive any Event of Default under the Loan Agreement (except with regard to Unassigned Rights) and its consequences or rescind any declaration of acceleration of payments of the Basic Loan Payments due under the Loan Agreement. In case of any such waiver or rescission, or in case any proceeding taken by the Authority or the Trustee on account of any such Event of Default shall be discontinued or abandoned or determined adversely to the Authority or the Trustee, then and in every such case the Authority and the Borrower will be restored to their former position and rights under the Loan Agreement, but no such waiver or rescission will extend to any subsequent or other Event of Default or impair any right consequent thereon.

Limited Liability, Authority, and Recourse (Section 10.06)

Notwithstanding anything to the contrary contained in the Loan Agreement, any other Bond Document, or other instrument executed in connection with the issuance of the Bonds or in support of the Project, the liability of the Borrower under any such Bond Document or other instrument will be limited to its interest in the Project and the other Security, and no Person will have the right to obtain payment from the Borrower or from any assets of the Borrower other than the Project and the other Security.

No Liability of the Borrower’s or the Beyond Owners Group’s Officers or the Authorized Borrower Representative (Section 10.07)

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No recourse under or upon any obligation, covenant, or agreement contained in the Loan Agreement, in any of the Bond Documents, or in any other documents delivered in connection with the issuance of the Bonds, or for any claim based thereon, or under any judgment obtained against the Borrower, or by the enforcement of any assessment or penalty or otherwise or by any legal or equitable proceeding by virtue of any constitution, rule of law or equity, or statute or otherwise or under any other circumstances, under or independent hereof, will be permitted to be had against Beyond Owners Group, the Authorized Borrower Representative, any incorporator, director, member, or officer, as such, past, present, or future of the Borrower or the Beyond Owners Group, or any incorporator, director, member, or officer of any successor entity, as such, either directly or through the Borrower, the Beyond Owners Group, or any successor entity, or otherwise, for the payment for or to the Borrower or any receiver thereof, of any sum that may be due and unpaid by the Borrower under the Loan Agreement, any of the Bond Documents, or any other documents delivered in connection with the issuance of the Bonds.

Restoration to Original Positions (Section 10.08)

In case the Authority or the Trustee shall have proceeded to enforce any right under the Loan Agreement, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case the Authority, the Borrower, and the Trustee will be restored to their former- positions and rights under the Loan Agreement, and all rights, remedies, and powers of the Authority and the Trustee will continue as if no such proceedings had been taken. To the extent that the Authority or the Trustee shall waive or rescind any Event of Default under the Loan Agreement, or in case any proceeding taken by the Authority or the Trustee on account of any such Event of Default shall have been discontinued or abandoned or determined adversely, then and in every such case the Authority, the Trustee and the Borrower will be restored to their former positions and rights under the Loan Agreement, respectively, but no such waiver or rescission will extend to any subsequent or other Event of Default or impairs any right consequent thereon.

Delay or Omission Not a Waiver (Section 10.09)

No delay or omission of the Authority or the Trustee to exercise any right or power accruing upon any Event of Default will impair any such right or power, or be construed to be a waiver of any such Event of Default or an acquiescence therein. Every power and remedy given by the Loan Agreement to the Authority or the Trustee will be permitted to be exercised from time to time and as often as may be deemed expedient by the Authority or the Trustee.

Waiver of Extension, Stay, and Redemption Laws (Section 10.10)

To the extent permitted by law, the Borrower will not be permitted, during the continuance of any Event of Default under the Loan Agreement, to insist upon, or plead, or in any manner whatever, claim or take any benefit or advantage of, any extension or stay law wherever enacted, now or at any time hereafter in force, that may affect the covenants and terms of performance of the Loan Agreement; nor after any sale or sales of the Project that may be made pursuant to any provision contained the Loan Agreement, or pursuant to the decree, judgment, or order of any court of competent jurisdiction claim or exercise any right under any statute heretofore or hereafter enacted by the United States of America or by any state or territory, or otherwise, to redeem the property so sold or any part thereof, and the Borrower will expressly waive all benefits or advantages of any such law or laws and covenants not to hinder, delay or impede the execution of any power in the Loan Agreement granted or delegated to the Authority, but to suffer and permit the execution of every power as though no such law or laws had been made or enacted.

Remedies Subject to Provisions of Laws (Section 10.11)

All rights, remedies, and powers provided by the Loan Agreement will be permitted to be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of the Loan Agreement are subject to all applicable mandatory provisions of law that may be controlling in the premises and to be limited to the extent necessary so that they will not render the Loan Agreement invalid or unenforceable under the provisions of any applicable law.

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No Right to Conduct Affairs of the Borrower (Section 10.12)

Nothing contained in the Loan Agreement will be construed to grant to the Authority or the Trustee the right to conduct the business and affairs of the Borrower, whether or not an Event of Default shall have occurred.

Rights of the Series 2019 Bond Insurer (Section 12.24)

Anything contained in the Loan Agreement to the contrary notwithstanding, the existence of all rights given to the Series 2019 Bond Insurer under the Loan Agreement with respect to the giving of consents or approvals or to the direction of proceedings are expressly conditioned upon its timely and full performance of the Series 2019 Bond Insurance Policy. Any such rights will not apply if at any time there are no Series 2019 Bonds Outstanding or a Series 2019 Bond Insurer Default exists; provided, that this paragraph will not in any way limit or affect the rights of the Series 2019 Bond Insurer as an Owner of Insured Series 2019 Bonds, as subrogee of an Owner of Insured Series 2019 Bonds or as assignee of an Owner of Insured Series 2019 Bonds or to otherwise be reimbursed and indemnified for its costs and expenses and other payment on or in connection with the Insured Series 2019 Bonds or the Series 2019 Bond Insurance Policy either by operation of law or at equity or by contract.

Amendments

See the heading “The Indenture - Amendment of Other Bond Documents” herein.

THE SERIES 2019 NOTE

Introduction

The Series 2019 Note of the Borrower, dated as of February , 2019, will be executed and delivered by the Borrower to the Authority and endorsed without recourse by the Authority to the Trustee to evidence the obligation of the Borrower to make Basic Loan Payments under the Loan Agreement in order to repay the Series 2019 Loan.

Payment Terms

The Series 2019 Note, in the original principal amount equal to the Series 2019 Bonds, bears interest at the same rates, as the rates on the Series 2019 Bonds. The Series 2019 Note requires payments of interest and principal sufficient to pay, when due, the Debt Service Payments on the Series 2019 Bonds. See “The Loan Agreement ¬Loan Payments and Other Amounts Payable.”

Prepayment Terms

The Series 2019 Note will be subject to prepayment in whole or in part under the same circumstances that permit or require prepayment of Loan Payments under the Loan Agreement. See “The Loan Agreement - Option to Prepay the Series 2019 Loan Upon the Occurrence of Certain Extraordinary Events” herein.

THE LEASEHOLD DEED OF TRUST

Introduction

The Leasehold Deed of Trust will provide security for the Borrower’s obligations under the Loan Agreement and any loan, financing, or similar agreement between the Authority and the Borrower relating to Additional Bonds and the Notes.

Security

To secure the Borrower’s obligations to the Authority under Loan Agreement and any loan, financing, or similar agreement between the Authority and the Borrower relating to Additional Bonds and the Notes, the Borrower will execute and deliver to Commonwealth Land Title Insurance Company (the “Deed of Trust Trustee”)

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for the benefit of the Trustee the Leasehold Deed of Trust pursuant to which the Borrower will, subject to Permitted Encumbrances, convey to the Deed of Trust Trustee for the benefit of the Trustee a first security title in and to its interest in the Project and the Property and all leases of all or part of the Project and will grant to the Deed of Trust Trustee for the benefit of the Trustee a security interest in all rents, issues, profits, revenues, income, receipts, moneys, royalties, rights and benefits of and from the Project and from and in connection with its ownership, occupancy, use, or enjoyment of the Project, subject to Permitted Encumbrances.

Remedies

Upon the occurrence and continuation of an Event of Default under the Indenture or the Loan Agreement, the Trustee will be entitled to exercise the remedies provided by the Leasehold Deed of Trust which will permit the Trustee (i) to declare the outstanding principal amount of the Series 2019 Bonds, the interest accrued thereon, and all other amounts payable with respect thereto to be due and payable immediately, and upon such declaration, such amounts shall immediately become and be due and payable, (ii) by itself, or by such officers or agents as it may appoint, to enter and take possession of the Project and to exclude the Borrower and their respective agents and employees wholly therefrom, (iii) to demand, collect, and sue for, in its own name, or in the name of the Borrower all of the rents, issues, profits, revenues, royalties, earnings, income, and benefits derived from the Project as they become due and payable, including those past due and unpaid and to apply such rents, issues, profits, revenues, royalties, earnings, income, and benefits to the payment of the Series 2019 Bonds, and (iv) with or without entry or taking possession, to proceed by suit or suits at law or in equity or by any other appropriate proceeding or remedy (a) to enforce payment of the Series 2019 Bonds or the performance of any term of the Loan Agreement, the Leasehold Deed of Trust, or any of the other Bond Documents or any other right; (b) to foreclose, the Leasehold Deed of Trust and to sell, as an entirety or in separate lots or parcels, the Project, under the judgment or decree of a court or courts of competent jurisdiction; and (c) to pursue any other remedy available to it. All proceeds from the exercise of the remedies provided by the Leasehold Deed of Trust will be applied as provided in the Indenture.

THE SECURITY AGREEMENT

Introduction

The Security Agreement will provide security for the Borrower’s obligations under the Loan Agreement and the Notes.

Security

To secure the Borrower’s obligations to the Authority under Loan Agreement and the Notes, the Borrower will execute and deliver to the Trustee the Security Agreement pursuant to which the Borrower will, subject to Permitted Encumbrances, grant to the Trustee a first priority security interest in its interest in the following (the “Collateral”): (a) the Pledged Revenues, (b) the Equipment, (c) the Inventory, (d) the Goods, (e) the UCC Accounts, (f) the General Intangibles, (g) Instruments, Drafts, and Chattel Paper, (h) the Documents of Title, (i) the Contracts, (j) all guarantees of the Borrower’s existing and future Accounts and General Intangibles and all other security held by the Borrower for the payment or satisfaction thereof and letter-of-credit rights in favor of the Borrower and other supporting obligations, (k) Goods, the sale or lease of which gave rise to any Account or General Intangible of the Borrower, including any returned Goods, (1) each deposit account of the Borrower or other account of the Borrower with the Trustee or any bank or financial institution and any other amounts which may be owing from time to time by any bank or financial institution to the Borrower, (m) all property of any nature whatsoever of the Borrower now or hereafter in the custody or possession of, or assigned or hypothecated to, the Trustee for any purpose, and (o) the Investment Property, in each case with respect to all such Collateral, whether located and whether now existing or hereafter created and whether now owner or hereafter acquired by the Borrower, and all accessions and additions to, replacements and substitutions for all Proceeds and products of any of the foregoing.

Remedies

Upon the occurrence and continuation of an Event of Default under the Indenture or the Loan Agreement, the Trustee will be permitted to exercise in respect of the Collateral, in addition to other rights and remedies

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provided for in the Security Agreement or otherwise available to it, all rights and remedies permitted under the Loan Agreement or otherwise permitted in law or in equity, to protect and dispose of the Collateral and to protect its rights to payment under the Loan Agreement and the Notes, and all the rights and remedies of a secured party on default under the UCC and also may (i) require the Borrower to, and the Borrower will agree that it will at its own expense, gather or assemble all or part of the Collateral not in the possession of the Trustee as directed by the Trustee and make it available to the Trustee at a place to be designated by the Trustee that is reasonably convenient to both parties and (ii) without notice, except as specified below, sell the Collateral, or any part thereof, in one or more parcels at public or private sale, at any of the Trustee’s offices or elsewhere, for cash, or credit, or for future delivery, and at such price or prices and upon such other terms as the Trustee may deem commercially reasonable. Any cash held by the Trustee as collateral and all cash proceeds received by the Trustee in respect of any sale of, collection from, or other realization upon all or any part of the collateral subject to the Security Agreement will be applied as provided in the Indenture.

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APPENDIX E

DTC BOOK-ENTRY SYSTEM

The information in this appendix concerning DTC and DTC’s book-entry system has been obtained from DTC and contains statements that are believed to describe accurately DTC, the method of effecting book-entry transfers of securities distributed through DTC and certain related matters, but neither the Authority nor the Borrower takes any responsibility for the accuracy or completeness of such statements. Beneficial Owners should confirm the following information with DTC or the DTC Participants.

This section describes how ownership of the Series 2019 Bonds is to be transferred and how the principal of and interest on the Series 2019 Bonds are to be paid to and credited by DTC while the Series 2019 Bonds are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The Borrower and the Underwriter believe the source of such information to be reliable, but take no responsibility for the accuracy or completeness thereof.

The Borrower cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Series 2019 Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Series 2019 Bonds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the United States Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC.

None of the Authority, the Borrower, the Trustee or the Underwriter has any responsibility or obligation to any Beneficial Owner with respect to (1) the accuracy of any records maintained by DTC or any DTC Participant, (2) the distribution by DTC or any DTC Participant of any notice that is permitted or required to be given to the Owners of the Series 2019 Bonds under the Indenture, (3) the payment by DTC or any DTC Participant of any amount received under the Indenture with respect to the Series 2019 Bonds, (4) any consent given or other action taken by DTC or its nominee as the Owner of the Series 2019 Bonds or (5) any other related matter.

DTC will act as securities depository for the Series 2019 Bonds. The Series 2019 Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered certificate will be issued for each maturity of the Series 2019 Bonds, in the aggregate principal amount of each maturity, and will be deposited with DTC.

GENERAL

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments, (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities

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transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of certificated securities. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.

DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC is rated AA+ by Standard & Poor’s. The DTC Rules applicable to its Participants are on file with the United States Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Series 2019 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2019 Bonds on DTC’s records. The ownership interest of each actual purchaser of Series 2019 Bonds (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2019 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Series 2019 Bonds representing their ownership interests in Series 2019 Bonds, except in the event that use of the book-entry system for the Series 2019 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2019 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2019 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership.

DTC has no knowledge of the actual Beneficial Owners of the Series 2019 Bonds; DTC’s records show only the identity of the Direct Participants to whose accounts such Series 2019 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2019 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2019 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Series 2019 Bonds may wish to ascertain that the nominee holding the Series 2019 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of the notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2019 Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

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Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2019 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Borrower as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Series 2019 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).

Principal, redemption and interest payments on the Series 2019 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Borrower or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, or the Borrower, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Borrower or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Series 2019 Bonds at any time by giving reasonable notice to the Borrower or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered to DTC Participants or the Beneficial Owners, as the case may be.

LIMITATION

For so long as the Series 2019 Bonds are registered in the name of DTC or its nominee, Cede & Co., the Authority, the Borrower and the Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of the Series 2019 Bonds for all purposes, including payments, notices and voting. So long as Cede & Co. is the registered owner of the Series 2019 Bonds, references herein to the Holders or registered owners of the Series 2019 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Series 2019 Bonds.

Because DTC is treated as the owner of the Series 2019 Bonds for substantially all purposes under the Indenture, Beneficial Owners may have a restricted ability to influence in a timely fashion remedial action or the giving or withholding of requested consents or other directions. In addition, because the identity of Beneficial Owners is unknown to the Authority, the Borrower, the Trustee or DTC, it may be difficult to transmit information of potential interest to Beneficial Owners in an effective and timely manner. Beneficial Owners should make appropriate arrangements with their broker or dealer regarding distribution of information regarding the Series 2019 Bonds that may be transmitted by or through DTC.

Under the Indenture, payments made by the Trustee to DTC or its nominee shall satisfy the Authority’s obligations under the Indenture and the Borrower’s obligations under the Loan Agreement to the extent of the payments so made.

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None of the Authority, the Borrower or the Trustee shall have any responsibility or obligation with respect to:

(i) the accuracy of the records of DTC, its nominee or any Direct Participant or Indirect Participant with respect to any beneficial ownership interest in any Series 2019 Bonds;

(ii) the delivery to any Direct Participant or Indirect Participant or any other Person, other than a Holder, as shown on the registration books maintained by the Trustee, of any notice with respect to any Series 2019 Bond including, without limitation, any notice of redemption with respect to any Series 2019 Bond;

(iii) the payment to any Direct Participant or Indirect Participant or any other Person, other than a Holder, as shown on the registration books maintained by the Trustee, of any amount with respect to the principal or redemption price of, or interest on, any Series 2019 Bond; or

(iv) any consent given by DTC or its nominee as registered owner.

Prior to any discontinuation of the book-entry only system hereinabove described, the Authority, the Borrower and the Trustee may treat Cede & Co. (or such other nominee of DTC) as, and deem Cede & Co. (or such other nominee) to be, the absolute Holder of the Series 2019 Bonds for all purposes whatsoever, including, without limitation:

(v) the payment of the principal or redemption price of and interest on and the Series 2019 Bonds;

(vi) giving notices of redemption and other matters with respect to the Series 2019 Bonds;

(vii) registering transfers with respect to the Series 2019 Bonds; and

(viii) the selection of Series 2019 Bonds for redemption.

The Authority and the Trustee cannot give any assurances that DTC or the Participants will distribute payments of the principal or redemption price of and interest on the Series 2019 Bonds, paid to DTC or its nominee, as the registered owner of the Series 2019 Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in the manner described in this Official Statement.

So long as Cede & Co. is the registered owner of the Series 2019 Bonds, as nominee of DTC, references in this Official Statement to the Holders of the Series 2019 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners, and Cede & Co. will be treated as the only Bondholder of Series 2019 Bonds for all purposes under the Indenture.

The Authority may enter into amendments to the agreement with DTC or successor agreements with a successor securities depository relating to the book-entry system to be maintained with respect to the Series 2019 Bonds without the consent of Beneficial Owners or Bondholders.

REMOVAL FROM THE BOOK-ENTRY SYSTEM

DTC may discontinue providing its services as securities depository with respect to the Series 2019 Bonds at any time by giving written notice to the Authority, the Trustee and the Borrower. The Authority or the Borrower, with the consent of the other, may terminate the services of DTC (or a successor securities depository). Upon the discontinuance or termination of the services of DTC, unless a

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substitute securities depository is appointed, Bond certificates will be printed and delivered to the Beneficial Owners of the Series 2019 Bonds.

In the event the Series 2019 Bonds are removed from the Book-Entry System, the principal of and the interest on the Series 2019 Bonds shall be payable to the persons in whose names the Series 2019 Bonds are registered on the Bond Register on the applicable Record Date. Payments of interest on the Series 2019 Bonds shall be made to the registered owner of the Series 2019 Bonds (as determined at the close of business on the Record Date next preceding the applicable Interest Payment Date) by check mailed on the Interest Payment Date and the principal amount of any Series 2019 Bond and premium, if any, together with interest payable other than a regularly scheduled Interest Payment Date, shall be made by check only upon presentation and surrender of the Series 2019 Bond on or after its maturity date or date fixed for redemption or other payment at the office of the Trustee; provided, however, that payment of principal of, premium, if applicable, and interest on any Series 2019 Bond may be made by wire transfer as described above under the heading “THE SERIES 2019 BONDS.”

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APPENDIX F

PROPOSED FORM OF OPINION OF BOND COUNSEL

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PROPOSED FORM OF OPINION OF BOND COUNSEL

Set forth below is the proposed form of opinion of McGuireWoods LLP, Bond Counsel, regarding the Bonds. It is preliminary and subject to change prior to delivery of the Bonds.

February __, 2019

Public Finance Authority Madison, Wisconsin

$60,760,000 $925,000 Public Finance Authority Public Finance Authority Student Housing Revenue Bonds Taxable Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State (Beyond Boone, LLC – Appalachian State University Project) Series 2019A University Project) Series 2019B

Ladies and Gentlemen:

We have served as Bond Counsel in connection with the issuance by the Public Finance Authority (the “Authority”) of its $60,760,000 Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Series 2019A (the “2019A Bonds”) and $925,000 Taxable Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Series 2019B (the “2019B Bonds” and, together with the 2019A Bonds, the “Bonds”), dated the date of their delivery. The Bonds have been issued pursuant to Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as amended (the “Act”) and the terms of a Trust Indenture dated as of February 1, 2019 (the “Trust Indenture”), between the Authority and Wilmington Trust, National Association, as Trustee (the “Trustee”). The proceeds of the Bonds shall be loaned to Beyond Boone, LLC, a Delaware limited liability company (the “Borrower”), pursuant to a Loan Agreement dated as of February 1, 2019 (the “Loan Agreement”), between the Authority and the Borrower, for the purpose of providing funds (i) to finance a portion of the cost of the acquisition, construction, furnishing, and equipping of the Series 2019 Project, (ii) to fund capitalized interest on the Bonds during the period of construction of the Series 2019 Project and for a period of six months thereafter, (iii) to fund a debt service reserve fund for the Bonds, (iv) to fund a portion of the premium for the Series 2019 Bond Insurance Policy and the Series 2019A Reserve Policy and (v) to pay certain costs of issuing the Bonds. Unless otherwise defined, each capitalized term used in this opinion shall have the meaning given it in the Trust Indenture or the Loan Agreement.

In connection with our opinion, we have examined the Act, the laws of the United States, including, without limitation, the Internal Revenue Code of 1986, as amended (the “Code”), the transcript of the proceedings with respect to the Bonds, certified copies of documents relating to the organization of the Authority and certified copies of proceedings and other documents relating to the issuance and sale by the Authority of the Bonds, including the resolution adopted by the Authority on January 23, 2019, authorizing the issuance of the Bonds.

Public Finance Authority February __, 2019 Page 2

The Bonds are payable solely from the revenues, receipts and payments pledged pursuant to the Trust Indenture, including from payments to be made by the Borrower under the Loan Agreement and the Series 2019 Notes executed by the Borrower in favor of the Authority, and assigned by the Authority to the Trustee as security for the payment of the Bonds.

With respect to the organization of the Borrower and Beyond Owners Group, Inc., a Pennsylvania nonprofit corporation and the sole member of the Borrower (“Beyond Owners Group”), the status of Beyond Owners Group as an organization described in Section 501(c)(3) of the Code, the power of the Borrower and Beyond Owners Group to enter into and perform their obligations under the documents to which each entity is a party, the due authorization of the Borrower Documents and each of the other documents executed by the Borrower and Beyond Owners Group in connection with the issuance and delivery of the Bonds, and the validity and enforceability of them against the Borrower and Beyond Owners Group, we have relied on the opinions of MacElree Harvey, Ltd. and Johnston, Allison & Hord, P.A., as counsel to the Borrower and Beyond Owners Group, each dated the date hereof and addressed to you and us.

As to questions of fact material to our opinion, we have relied upon: (a) representations of and compliance with covenants by the Borrower and the Authority contained in certificates and other documents delivered at closing; (b) certificates of public officials furnished to us; and (c) certificates of representatives of the Borrower, the Authority and other parties, including, without limitation, representations, covenants and certifications as to the use of the proceeds of the Bonds, compliance with the arbitrage reporting and rebate requirements, the average reasonably expected economic life of the property being financed and refinanced with the proceeds of the Bonds and other factual matters which are relevant to the opinions expressed in paragraphs 7 and 8, in each case without undertaking any independent verification. We have assumed that all signatures on documents, certificates and instruments examined by us are genuine, all documents, certificates and instruments submitted to us as originals are authentic and all documents, certificates and instruments submitted to us as copies conform to the originals. In addition, we have assumed that all documents, certificates and instruments relating to this financing have been duly authorized, executed and delivered by all of their parties other than the Authority, and we have further assumed the due organization, existence and powers of such other parties other than the Authority.

Based on the foregoing, we are of the opinion that:

1. The Authority is a validly existing bond issuing commission duly created by the Act and is vested with the rights and powers conferred by the Act.

2. The Authority has all requisite authority and power under the Act to issue the Bonds and to enter into and perform its obligations under the Trust Indenture and Loan Agreement and to apply the proceeds from the issuance of the Bonds as contemplated by the Loan Agreement.

3. The Bonds have been duly authorized and issued in accordance with the Act and the Trust Indenture and, subject to paragraph number 6 below, constitute valid, binding and enforceable special limited obligations of the Authority, payable in accordance with their terms. The principal of and interest on the Bonds are payable from payments to be made by the Borrower under and pursuant to the Loan Agreement and the Series 2019 Notes and other property specifically pledged to such purpose under the Trust Indenture. The Bonds are special limited obligations of the Authority and are not a debt or

F-2

Public Finance Authority February __, 2019 Page 3

liability of any Member of the Authority, the State of Wisconsin, or any political subdivision or agency thereof other than the Authority. The Bonds do not, directly, indirectly or contingently, obligate, in any manner, any Member of the Authority, the State of Wisconsin or any political subdivision thereof to levy any tax or to make any appropriation for payment of the Bonds. The Bonds are payable solely from the funds pledged for their payment in accordance with the Trust Indenture. Neither the faith and credit nor the taxing power of any Member of the Authority or any political subdivision or agency approving the issuance of the Bonds, nor the faith and credit of the Authority, shall be pledged to the payment of the principal of, premium, if any, or interest on, the Bonds. The Authority has no taxing power.

4. The Trust Indenture and the Loan Agreement have been duly authorized, executed and delivered by the Authority and, subject to paragraph number 6 below, constitute valid and binding agreements of the Authority, enforceable against the Authority in accordance with their terms.

5. The Authority’s right, title and interest in the Series 2019 Notes have been assigned to the Trustee and, subject to paragraph number 6 below, such assignment constitutes a valid and binding assignment by the Authority, enforceable against the Authority in accordance with its terms.

6. The enforceability of the obligations of the parties under the Bonds, the Trust Indenture and the Borrower Documents is subject to the provisions of applicable bankruptcy, insolvency, reorganization, moratorium and similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors’ rights and remedies. The enforceability of such obligations is also subject to usual equitable principles, which may limit the specific enforcement of certain rights and remedies but which do not affect the validity of such documents. Certain indemnity provisions may be unenforceable pursuant to court decisions invalidating such indemnity agreements on grounds of public policy.

7. Under current law, interest on the 2019A Bonds (a) is excludable from gross income for purposes of federal income taxation and (b) is not a specific item of tax preference for purposes of the federal alternative minimum income tax. The opinions set forth in this paragraph are subject to the condition that the Authority, the Borrower and Beyond Owners Group comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2019A Bonds so that interest on the 2019A Bonds continues to be excludable from gross income for federal income tax purposes. We express no opinion regarding any other tax consequences arising with respect to the 2019A Bonds.

In delivering this opinion, we are relying upon certifications of representatives of the Authority, the Borrower, Beyond Owners Group and other parties as to facts material to the opinion, which we have not independently verified. We are also assuming continuing compliance with the Covenants (as hereinafter defined) by the Authority, the Borrower, and Beyond Owners Group. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied after the issuance of the 2019A Bonds in order for interest on the 2019A Bonds to be and remain excludable from gross income for purposes of federal income taxation. These requirements include, by way of example and not limitation, the requirement that Beyond Owners Group maintain its status as an organization described in Section 501(c)(3) of the Code, restrictions on the use, expenditure and investment of the proceeds of the 2019A Bonds and the use of the property financed or refinanced by the 2019A Bonds, limitations on the source of the payment of and the security for the 2019A Bonds, and the obligation to rebate certain excess earnings on the gross proceeds of the 2019A Bonds to the United States Treasury. The Trust Indenture, the Loan Agreement, and the Tax Agreement contain covenants (the “Covenants”) under which the Authority, the Borrower and Beyond Owners Group have agreed to comply with such

F-3 Public Finance Authority February __, 2019 Page 4 requirements. Failure by the Authority, the Borrower or Beyond Owners Group to comply with their respective Covenants could cause interest on the 2019A Bonds to become includable in gross income for federal income tax purposes retroactively to the date of their issuance. In the event of noncompliance with the Covenants, the available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent interest on the 2019A Bonds from becoming includable in gross income for federal income tax purposes. Compliance by the Authority with its Covenants does not require the Authority to make any financial contribution for which it does not receive funds from the Borrower. We have no responsibility to monitor compliance with the Covenants after the date of issue of the 2019A Bonds.

Certain requirements and procedures contained, incorporated or referred to in the Trust Indenture, the Loan Agreement and the Tax Agreement, including the Covenants, may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. We express no opinion concerning any effect on the excludability of interest on the 2019A Bonds from gross income for federal income tax purposes of any such subsequent change or action that may be made, taken or omitted upon the advice or approval of counsel other than this firm.

8. Under current law, interest on the 2019B Bonds is includable in gross income of the owners thereof for federal income tax purposes.

This opinion letter speaks as of its date, is based on current legal authority and precedent, covers certain matters not directly addressed by such authority and precedent, and represents our judgment as to the proper treatment of interest on the Bonds for federal income tax purposes. This opinion letter does not contain or provide any opinion or assurance regarding the future activities of the Authority, the Borrower or Beyond Owners Group, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the Internal Revenue Service. The Authority, the Borrower and Beyond Owners Group have covenanted, however, to comply with the requirements of the Code.

Our services as Bond Counsel to the Authority have been limited to rendering the foregoing opinions based on our review of such legal proceedings and other documents as we deem necessary to make the statements contained in this letter and to approve the validity of the Bonds and the tax status of the interest thereon, as described above. We express no opinion as to the accuracy, completeness or sufficiency of any information that may have been relied upon by anyone in making the decision to purchase the Bonds, including the Preliminary Official Statement dated January 23, 2019 and the Final Official Statement dated February 4, 2019, relating to the offering of the Bonds. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.

Very truly yours,

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APPENDIX G

CONTINUING DISCLOSURE AGREEMENT

[ THIS PAGE INTENTIONALLY LEFT BLANK ] CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (the “Agreement”) dated as of February 1, 2019, is executed and delivered by Beyond Boone, LLC doing business in the State of North Carolina (the “Borrower”), and Wilmington Trust, National Association (the “Dissemination Agent”) in connection with the issuance by the Public Finance Authority (the “Issuer”) of its $______Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Series 2019A (the “Series 2019A Bonds”) and its $______Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Taxable Series 2019B (the “Series 2019B Bonds” together with the Series 2019B Bonds, the “Series 2019 Bonds”). The Series 2019 Bonds are being issued pursuant to the Indenture described below.

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Agreement is being executed and delivered by the Borrower and the Dissemination Agent for the benefit of the holders and Beneficial Owners (defined below) of the Series 2019 Bonds and in order to assist RBC Capital Markets, LLC (the “Participating Underwriter”), in complying with the Rule (defined below). The Borrower and the Dissemination Agent acknowledge that the Issuer has undertaken no responsibility with respect to any reports, notices or disclosures provided or required to be provided under this Agreement, and has no liability to any Person, including (without limitation) any holder or Beneficial Owner of the Series 2019 Bonds, with respect to any such reports, notices or disclosures.

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Agreement unless otherwise defined herein, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Borrower pursuant to, and as described in, Sections 3 and 4 of this Agreement.

“Beneficial Owner” shall mean any Person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2019 Bonds (including Persons holding Series 2019 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2019 Bonds for federal income tax purposes.

“Bond Trustee” shall mean Wilmington Trust, National Association, as trustee under the Indenture.

“Disclosure Representative” shall mean such person or persons as the Borrower shall designate in writing to the Dissemination Agent and the Bond Trustee from time to time.

“Dissemination Agent” shall mean Wilmington Trust, National Association, acting in its capacity as dissemination agent hereunder, or any successor dissemination agent designated in writing by the Borrower and which has filed with the Bond Trustee a written acceptance of such designation.

G-1 “EMMA” shall mean the Electronic Municipal Market Access system of the Municipal Securities Rulemaking Board as provided at http://www.emma.msrb.org, or any similar system that is acceptable to or as may be specified by the Securities and Exchange Commission from time to time. A current list of such systems may be obtained from the Securities and Exchange Commission at http://www.sec.gov/info/municipal/nrrnsir.html.

“Ground Lease” means the Ground Lease Agreement dated as of February __, 2019 between the State of North Carolina by and through the Appalachian State University, as lessor, and the Borrower, as lessee, as the same may be further amended or supplemented from time to time.

“Indenture” shall mean the Trust Indenture dated as of February 1, 2019, by and between the Issuer and the Bond Trustee, as the same may be further amended and supplemented from time to time.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Agreement.

“Loan Agreement” shall mean the Loan Agreement dated as of February 1, 2019, by and between the Issuer and the Borrower, as the same may be further amended and supplemented from time to time.

“Manager” means the Appalachian State University and its successors and assigns and any surviving, resulting or transferee entity and any other management company engaged to manage the Student Housing Facilities pursuant to a management agreement.

“Participating Underwriter” shall mean RBC Capital Markets, LLC, as the original Participating Underwriter of the Series 2019 Bonds required to comply with the Rule in connection with the offering of the Series 2019 Bonds.

“Project” means the acquisition, construction, furnishing and equipping of the Student Housing Facilities and related amenity space and improvements to be constructed with proceeds of the Series 2019 Bonds on the campus of the Appalachian State University and any additional project acquired, constructed, furnished and equipped with the proceeds of Additional Bonds (as defined in the Indenture).

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“Student Housing Facilities” means the approximately 590 - bed student housing facility and related amenity space and improvements.

“State” means the State of North Carolina.

SECTION 3. Provision of Annual Reports; Other Reporting Requirements.

(a) The Borrower shall provide, or shall cause the Dissemination Agent to provide, not later than 180 days after the end of each Fiscal Year, commencing with the report

G-2 for the Fiscal Year ending June 30, 20__, to EMMA, an Annual Report which is consistent with the requirements of Section 4 of this Agreement. In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross- reference other information as provided in Section 4 of this Agreement. If the Fiscal Year of the Borrower changes, the Borrower shall notify the Dissemination Agent and the Bond Trustee in writing of such change.

(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Reports to EMMA, the Borrower shall provide the Annual Report to the Dissemination Agent. If, by such date, the Dissemination Agent has not received a copy of an Annual Report, the Dissemination Agent shall contact the Borrower to determine if the Borrower is in compliance with subsection (a) above.

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to EMMA by the date required in subsection (a) above, the Dissemination Agent shall send a notice to EMMA in substantially the form attached hereto as Exhibit A.

(d) The Dissemination Agent shall, if and to the extent the Borrower has provided the Annual Report to the Dissemination Agent, file a report with the Bond Trustee (if the Dissemination Agent is not the Bond Trustee) certifying that the Annual Report has been provided pursuant to this Agreement and stating the date it was provided.

(e) Additionally, during construction and until substantial completion of the Student Housing Facilities the Borrower shall provide or cause the Dissemination Agent to provide to EMMA, within 30 days of the end of each calendar month, monthly construction progress reports for the Student Housing Facilities received by the Borrower from the Developer (as defined in the Indenture).

(f) Additionally, the Borrower shall provide, or cause the Dissemination Agent to provide, to EMMA, no later than 45 days after the beginning of each fall semester and spring semester housing occupancy reports; commencing with the housing occupancy report for Fiscal Year ending June 30, 2021, for the Student Housing Facilities.

(g) Additionally, the Dissemination Agent shall provide to EMMA, no later than 15 days after the receipt thereof by the Dissemination Agent, any reports from a Financial Consultant (as defined in the Indenture) received in connection with the Fixed Charges Coverage Ratio as described in the Loan Agreement.

SECTION 4. Content of Annual Report. The Annual Report of the Borrower shall contain or include by reference the following information:

(a) The audited financial statements of the Borrower for the Project for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles for nonprofit corporations as promulgated from time to time by the Financial Accounting Standards Board. A calculation of the Fixed Charges Coverage Ratio (as defined in the Indenture) shall be included with such audits in the Auditor’s Report on Accompanying Information.

G-3 The audited financial statements described above may be included by specific reference to other documents, including official statements of debt issues with respect to which the Borrower is an “obligated person” (as defined by the Rule), which have been filed with EMMA. If the document included by reference is a final limited offering memorandum, it must be available from the Municipal Securities Rulemaking Board. The Borrower shall clearly identify each such other document so included by reference.

(b) Statistical information received by the Borrower from the Ground Lessor for the preceding Fiscal Year included under the heading “THE UNIVERSITY” in the Official Statement for the Series 2019 Bonds in the Section “--Academics and Enrollment”, under the table entitled “ – Selected Enrollment Data, Fall Semester,” in the Section “ – Admissions” under the table entitled “Applications and Acceptances,” and in the Section “Current University Student Housing” under the table entitled “ – On-Campus Housing Occupancy” and “--Freshman On-Campus Housing.”

(c) Statistical information received by the Borrower from the Manager for the preceding Fiscal Year included under the heading “THE UNIVERSITY HOUSING MASTER PLAN” in the Official Statement for the Series 2019 Bonds under the tables entitled “-- Overview“ and “- Unit Mix and Rental Rates” commencing with Fiscal Year ending June 30, 2021 for unit mix and rental rates for the Student Housing Facilities.

SECTION 5. Reporting of Significant Events.

(a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events (each, a “Listed Event”):

i. Principal and interest payment delinquencies;

ii. Non-payment related defaults, if material;

iii. Unscheduled draws on debt service reserves reflecting financial difficulty;

iv. Unscheduled draws on credit enhancements reflecting financial difficulty;

v. Substitution of credit or liquidity providers, or their failure to perform;

vi. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other Listed Events affecting the tax status of the Bonds;

vii. Modifications to rights of Bondholders, if material;

viii. Bond calls, if material, and tender offers;

G-4 ix. Defeasances;

x. Release, substitution or sale of property securing repayment of the Bonds, if material;

xi. Rating changes;

xii. Bankruptcy, insolvency, receivership or similar event of the Borrower. For purposes of this clause (xii), any such event shall be considered to have occurred when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Borrower in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Borrower, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Borrower;

xiii. The consummation of a merger, consolidation, or acquisition involving the Borrower or the sale of all or substantially all of the assets of the Borrower, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

xiv. Appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent, if material.

(b) The Dissemination Agent shall, within three (3) Business Days of obtaining actual knowledge of the occurrence of a Listed Event or an event that might constitute a Listed Event, provide the Borrower with written notice. The Dissemination Agent shall not be deemed to have actual knowledge of those items listed in clauses (ii), (vi), (vii), (x), (xi), (xii) or (xiii) without the Dissemination Agent having received written notice of such event.

(c) Whenever the Borrower obtains knowledge of the occurrence of a Listed Event or an event that might constitute a Listed Event, because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Borrower shall, within five (5) Business Days after obtaining such knowledge and in any event no more than seven (7) Business Days after the occurrence of such event, determine if such event is in fact a Listed Event and provide the Dissemination Agent with written notice pursuant to subsections (d) or (e) below, as applicable.

G-5 (d) If the Borrower determines that an event is a Listed Event, the Borrower shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). Such notice shall include sufficient information concerning the Listed Event to enable the Dissemination Agent to report the occurrence.

(e) If the Borrower determines that an event is not a Listed Event, the Borrower shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f).

(f) If the Dissemination Agent has been instructed by the Borrower in writing to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the EMMA within three (3) Business Days of its receipt of such instructions from the Borrower and in any event no more than ten (10) Business Days after the occurrence of such event. Notwithstanding the foregoing, notice of Listed Events described in clauses (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to the holders of affected Bonds pursuant to the Indenture.

SECTION 6. Termination of Reporting Obligation. Except as otherwise provided herein, the obligations under this Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2019 Bonds. If the Borrower’s obligations under the Loan Agreement are assumed in full by another Person, such other Person shall be responsible for compliance with this Agreement in the same manner as if it were the Borrower and the Borrower shall have no further responsibility hereunder (except with respect to obligations of the Borrower which survive the termination hereof pursuant to Section 11 hereof). If such termination or substitution occurs prior to the final maturity of the Series 2019 Bonds, the Borrower shall give notice of such termination or substitution in the same manner as for a Listed Event under Section 5(f) hereof.

SECTION 7. Dissemination Agent. The Borrower may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Borrower pursuant to this Agreement. The initial Dissemination Agent shall be Wilmington Trust, National Association. The Dissemination Agent may resign at any time by providing at least 30 days’ written notice to the Borrower, and such resignation shall be effective as of the date of the appointment of a designated Dissemination Agent.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Agreement, the Borrower and the Dissemination Agent may amend this Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Borrower other than amendments increasing or affecting the obligations or duties of the Dissemination Agent, which amendments shall require the consent of the Dissemination Agent, as applicable) and any provision of this Agreement may be waived if such amendment or waiver would not, in the opinion of nationally recognized federal securities law counsel, cause the undertakings herein to violate the Rule as in effect at the time of the original issuance of the Series 2019 Bonds, after taking into account any amendments or interpretations of the Rule.

G-6 In the event of any amendment or waiver of a provision of this Agreement, the Borrower shall describe such amendment in the next Annual Report of the Borrower, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Borrower. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(f), and (ii) the Annual Reports for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION 9. Additional Information. Nothing in this Agreement shall be deemed to prevent the Borrower from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Agreement. If the Borrower chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Agreement, the Borrower shall not have any obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 10. Default. In the event of a failure of the Borrower to comply with any provision of this Agreement, the Dissemination Agent, at the written direction of the Participating Underwriter, or any holder or Beneficial Owner of the Series 2019 Bonds (but only if and to the extent the Dissemination Agent is indemnified to its satisfaction from any costs, liability, or expense including, without limitation, fees and expenses of its attorneys, as provided in the Indenture) may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Borrower to comply with its obligations under this Agreement. A default under this Agreement shall not be deemed an Event of Default under the Indenture, the Loan Agreement, or the Leasehold Mortgage and the sole remedy under this Agreement in the event of a failure of the Borrower to comply with this Agreement shall be an action to compel performance; provided, however that nothing in this Agreement shall limit any holder’s rights under applicable federal securities laws.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Agreement, and no further duties or responsibilities shall be implied. Any corporation or association into which the Dissemination Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Dissemination Agent in its individual capacity shall be a party, or any corporation or association to which all or substantially all the corporate trust business of the Dissemination Agent in its individual capacity may be sold or otherwise transferred, shall be the Dissemination Agent under this Agreement without further act. The Borrower covenants and agrees to indemnify and hold the Dissemination Agent and its directors, officers, agents and employees (collectively, the “Indemnitees”) harmless from and against any and all liabilities, losses, damages, fines, suits, actions, demands, penalties, costs and expenses,

G-7 including out-of-pocket, incidental expenses, legal fees and expenses, the allocated costs and expenses of in-house counsel and legal staff and the costs and expenses of defending or preparing to defend against any claim (“Losses”) that may be imposed on, incurred by, or asserted against, the Indemnitees or any of them for following any instruction or other direction upon which the Dissemination Agent’s authorized to rely pursuant to the terms of this Agreement. Provided the Dissemination Agent has not acted negligently, the Borrower also covenants and agrees to indemnify and hold the Indemnitees and each of them harmless from and against any and all Losses that may be imposed on, incurred by, or asserted against the Indemnitees or any of them in connection with or arising out of the Dissemination Agent’s performance under this Agreement. The provisions of this Section 11 shall survive the termination of this Agreement and the resignation or removal of the Dissemination Agent for any reason. Anything in this Agreement to the contrary notwithstanding, in no event shall the Dissemination Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to loss profits), even if the Dissemination Agent has been advised of such loss or damage and regardless of the form of action. The obligations of the Borrower under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Series 2019 Bonds or the termination hereof.

(b) The Issuer shall have no responsibility or liability in connection with the Borrower’s compliance with the Rule, its filing obligations under this Agreement or in connection with the contents of such filings. The Borrower agrees to indemnify and save the Issuer and the Authority Indemnified Persons (as defined in the Indenture), harmless against any loss, expense (including reasonable attorneys’ fees) or liability arising out of (i) any breach by the Borrower of this Agreement or (ii) any Annual Report or notices provided under this Agreement or any omissions therefrom.

SECTION 12. Notices. Any notices or communications to or among any of the parties to this Agreement may be given as follows:

To the Borrower: Beyond Boone, LLC PMB 218 2600 Willow Street Pike North Willow Street, Pennsylvania 17584 Attention: President Telephone: 717-341-3957

with a copy to:

Appalachian State University B.B. Dougherty Administration Building 438 Academy Street Boone, North Carolina 28608 Attention: Vice Chancellor for Business Affairs Telephone: 828-262-2030

G-8 To the Dissemination Wilmington Trust, National Association Agent: 505 20th Street North, Suite 1750 Birmingham, AL 35203 Attention: Corporate Trust Telephone: (205) 986-7603 Facsimile: (205) 327-5642

Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notices or communications should be sent.

SECTION 13. Beneficiaries. This Agreement shall inure solely to the benefit of the Borrower, the Dissemination Agent, the Issuer, the Authority Indemnified Persons, the Participating Underwriter, and the holders and Beneficial Owners from time to time of the Series 2019 Bonds, and shall create no rights in any other person or entity.

SECTION 14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

SECTION 15. Applicable Law. This Agreement shall be construed under the laws of the State.

SECTION 16. No Liability of Borrower’s Officers. No recourse under or upon any obligation, covenant, or agreement contained in this Agreement or in any other documents delivered in connection with the issuance of the Series 2019 Bonds, or for any claim based thereon, or under any judgment obtained against the Borrower, or by the enforcement of any assessment or penalty or otherwise or by any legal or equitable proceeding by virtue of any constitution, rule of law or equity, or statute or otherwise or under any other circumstances, under or independent hereof, shall be had against any incorporator, director, member, or officer, as such, past, present, or future of the Borrower or the Foundation, or any incorporator, director, member, or officer of any successor entity, as such, either directly or through the Borrower or any successor entity, or otherwise, for the payment for or to the Borrower or any receiver thereof, of any sum that may be due and unpaid by the Borrower under this Agreement or any other documents delivered in connection with the issuance of the Series 2019 Bonds.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

G-9 IN WITNESS WHEREOF, the Borrower and the Dissemination Agent have executed this Agreement under seal on the date and year first written above.

Beyond Boone, LLC

By: Beyond Owners Group, sole member

By: Name: Title:

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Dissemination Agent

By: Name: Title:

G-10 EXHIBIT A

NOTICE TO EMMA OF FAILURE TO FILE REPORT

Name of Issuer: Public Finance Authority

Name of Bond Public Finance Authority (the “Issuer”) of its $______Student Issue: Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Series 2019A and $______Student Housing Revenue Bonds (Beyond Boone, LLC – Appalachian State University Project) Taxable Series 2019B

Name of Borrower: Beyond Boone, LLC

Date of Issuance: February __ 2019

NOTICE IS HEREBY GIVEN that the Borrower has not provided an Annual Report with respect to the above-named Series 2019 Bonds.

Dated: Wilmington Trust, National Association, on behalf of Beyond Boone, LLC

By: Name: Title:

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APPENDIX H

SPECIMEN MUNICIPAL BOND INSURANCE POLICY

[ THIS PAGE INTENTIONALLY LEFT BLANK ] MUNICIPAL BOND INSURANCE POLICY

ISSUER: Policy No: -N

BONDS: $ in aggregate principal amount of Effective Date: Premium: $

ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) for the Bonds, for the benefit of the Owners or, at the election of AGM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.

On the later of the day on which such principal and interest becomes Due for Payment or the Business Day next following the Business Day on which AGM shall have received Notice of Nonpayment, AGM will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and interest on the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by AGM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right to receive payment of the principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner's rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in AGM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM for purposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in respect of a Bond, AGM shall become the owner of the Bond, any appurtenant coupon to the Bond or right to receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of the Owner, including the Owner's right to receive payments under the Bond, to the extent of any payment by AGM hereunder. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the obligation of AGM under this Policy.

Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer's Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment" means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to the

H-1 Page 2 of 2 Policy No. -N

United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or the Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies of all notices required to be delivered to AGM pursuant to this Policy shall be simultaneously delivered to the Insurer's Fiscal Agent and to AGM and shall not be deemed received until received by both and (b) all payments required to be made by AGM under this Policy may be made directly by AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurer's Fiscal Agent is the agent of AGM only and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's Fiscal Agent or any failure of AGM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.

To the fullest extent permitted by applicable law, AGM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to AGM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy.

This Policy sets forth in full the undertaking of AGM, and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

In witness whereof, ASSURED GUARANTY MUNICIPAL CORP. has caused this Policy to be executed on its behalf by its Authorized Officer.

ASSURED GUARANTY MUNICIPAL CORP.

By Authorized Officer

A subsidiary of Assured Guaranty Municipal Holdings Inc. 1633 Broadway, New York, N.Y. 10019 (212) 974-0100

Form 500NY (5/90)

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